Photo: Supplied / Sanford
Seafood company Sanford's half-year profits have nearly doubled, though labour shortages and cost pressures have kept the company below its pre-Covid profit levels.
Key numbers for the six months ended March 31 compared with a year ago:
- Net profit $11.1m vs $6.1m
- Revenue $277.6m vs $270.9m
- Adjusted underlying profit $26.6m vs $19.2m
- Interim/final dividend 6 cents a share vs no dividend
Sanford chief executive Peter Reidie said the company's profits had been heavily impacted by the pandemic, but its balance sheet was improving.
"We have seen very encouraging growth in global sales," he said.
"There is strong demand across the board. This ranges from our highly valued scampi and salmon to more everyday products such as hoki and squid. We have seen record pricing in the period for all these species and more."
Reidie said the company's salmon division continued to perform well, with an increase in profit contribution of 45 percent or $5.5 million and revenue growth of 8 percent.
"Pricing and demand are strong and harvest volumes are stable compared to the first half of 2022," he said.
"The reduction of volume is driven by clearance of frozen volume in the prior comparable period.
"We can also report that mortalities are low (at 2.9 percent for H1) and are well managed with new initiatives such as pen relocation, increased net cleaning and the option to add oxygenation when required."
However the supply chain remained under pressure from local and global issues, he said.
"Our sea freight rates were contracted in mid-2022 and therefore a premium is being paid for current shipments," Reidie said.
"These rates will soften for FY24. Supply chain cost increases are being passed to customers."
Conditional sale of North Island annual catch entitlement
Sanford also announced the conditional sale of its North Island annual catch entitlement (ACE) to rival Moana New Zealand, for at least 10 years.
The deal was still to be approved by the New Zealand Commerce Commission, but would see Sanford close its Auckland processing plant if approved.
Sanford would receive between nearly $11m for the first year, scaling up to $13m over the next five years, with the fee to increase at 1.5 percent annually afterwards.
"While the deepwater part of the business is stable and profitable, unfortunately the inshore area of Sanford's Wildcatch division has been underperforming for some time," Reidie said.
Forsyth Barr analyst Margaret Bei said the deal would be a positive development for Sanford, as the aging inshore fleet and the underperforming inshore portion of wildcatch had been a key problem for the company.