Sanford 1H profit slips on cheap tuna and mackerel

Wednesday 28th May 2014

Sanford, the listed fishing company, reported a 17 percent drop in first-half profit, driven by lower prices for pelagic species such as skipjack tuna and blue mackerel. It held the first-half dividend unchanged at 9 cents a share.

Net profit was $11.7 million for the six months ended March 31, from $14.1 million a year earlier, the Auckland-based company said in a statement. Sales fell 9.6 percent to $221.1 million.

Sanford operates across the fishing industry, including inshore and deepwater fishing and processing, aquaculture operations of salmon and mussels farming as well as three international tuna vessels. It didn't break down results by market segment, instead providing figures for its New Zealand unit, where earnings fell 23 percent to $11.3 million, and Australia, which turned to a profit of $183,000 from a loss of $1.1 million a year earlier.

Customer sales in New Zealand increased 7.6 percent to $42.3 million, while Australian sales slipped to $39.6 million from $44 million. European sales were largely unchanged at $29.8 million while sales in North America surged 34 percent to $38.4 million.

"The major export markets for our main species have either been buoyant or remained firm for the first six months," the company said. "The only significant exceptions have been the skipjack commodity market which has suffered from short term oversupply, and the blue mackerel market which has experienced a significant reduction in demand. The domestic market has performed well, particularly for quality, fresh fish."

After balance date, Sanford agreed to buy the mussel farming and processing assets of Greenshell NZ Limited and Greenshell Investments from receivers to add supply and "minimise biological risk through geographical diversity". Previously directors of the mussel company had tried unsuccessfully to sell the assets and there were concerns about its ongoing viability and “various complex contractual arrangements,” according to the first receivers’ report. The mussel farms were kept operating pending the sale of assets.

The company said today that it expected aquaculture and fishing operations to exceed the previous year, weather permitting.

The shares were unchanged at $4.10 and have fallen 12 percent in the past year. The stock is rated an average of 'hold' according to three analysts surveyed by Reuters with a median price target of $4.65.

BusinessDesk.co.nz

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