Sanford’s earnings rise 25%
Switch of focus to higher-value products pays
Sanford, New Zealand’s largest listed seafood company, lifted first-half profit 25 per cent as the benefits from selling more higher-value fresh seafood offset lower prices for frozen commodity products and disruption from bad weather.
Profit rose to $19 million in the six months to March 31 from $15.3m a year earlier, the Auckland company said. Revenue from continuing operations advanced 5 per cent to $230.4m.
Sanford is turning its focus to extracting more value from the harvests from its inshore and deepwater fishing boats, and salmon and mussel aquaculture units. It is investing in new fishing boats, developing higher-value brands and selling more fresh produce to restaurants. In the latest period it benefited from increased pricing of higher value, non-commodity products such as toothfish, scampi and salmon and a production shift towards higher-value items such as fillets.
“Sanford continues its journey towards becoming a company more focused on fresh and chilled product,” chairman Paul Norling and chief executive Volker Kuntzsch said in the interim report.
“This work is progressing well, but is not a rapid transformation and a large share of our volume will continue to be processed into frozen product and remains susceptible to fluctuations in global commodity prices for the time being.”
The company will pay a 9c--ashare dividend on June 16, unchanged from the year before.
In the past 12 months, Sanford has invested in consumer marketing and domestic sales teams, developed new packaging for its mainstream Sanford Blue brand, is about to roll out its premium Sanford Black brand and is trialling the Tiaki brand with partners. It has launched its super premium Big Glory Bay brand with prominent local chefs and expects it to appear soon on restaurant menus. It will then be launched in the retail domestic market before expanding into the export food service sector.
Sanford said its new strategy had led it from servicing no restaurants in Auckland to supplying about a third of the top 50 restaurants.
In the first half, storms and heavy rain interrupted mussel harvesting, while strong winds meant smaller fishing vessels had to seek shelter and cooler water made migratory species like skipjack tuna and jack mackerel harder to catch. The Kaikoura earthquake in November 2016 also disrupted operations.
In its aquaculture unit the mussel harvest was affected by a limited spat supply from previous years. Frozen half-shell mussel prices were weaker, although Sanford expects them to lift in the second half. The salmon harvest was in line with expectations.