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Sanford first-half profit tumbles 79% as skipjack tuna, mussel prices fall

Thursday 27th May 2010

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Sanford posted a 79% slump in first-half profit on weaker prices for skipjack tuna and mussels and said there are early signs markets will improve in the second six months of the year.

Net income fell to $5.4 million in the six months ended March 31, from $26 million a year earlier, the company said in a statement. Sales declined 18.6% to $185.9 million.

Sanford laid the blame for weakness in mussel markets on price pressure from “New Zealand producers undercutting each other” and said marketing efforts by the industry haven’t succeeded in stablising prices. The outlook for the second half is brighter as the kiwi dollar has weakened and inventories of hoki and salmon are shrinking and markets are recovering.

“Despite the poor result for the first six months there are indications that we will see some reasonable recovery in the second six months,” managing director Eric Barratt said in the statement. Customer acceptance of increases in prices for mussels over coming months should see “a reasonable recovery in profitability” in the second half.

Sanford maintained its first-half dividend at 9 cents a share, given the future outlook, it said. Of the 19% drop in sales, $17 million was due to lower prices for some species, $22 million was because of a higher exchange rate and $3 million reflected lower volumes.

Shares of Sanford rose 0.2% to $4.46.

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