Sanford issues profit warning

ing company indicated that the second-half result was likely to be in line with its first half after-tax profit of $14.1 million.

But yesterday Barratt said fullyear profit was more likely to be about $3m to $5m lower, in the $23m to $25m range.

That is still year’s $21m.

Sanford’s disclosure comes after revelations that rival Sealord Group was likely to report a loss of about $40m on writedowns from a failed Argentine investment.

Barratt said Sanford’s skipjack tuna catches in the Pacific had been much lower than planned.

The high cost of operating three large purse seiners had a significant

higher

than

last effect on profitability when catches dropped to low levels, he said.

The use of fish aggregation devices in the tuna fishery had been limited and ‘‘the likelihood of improvement in catch rates from these vessels is low’’.

The devices are controversial due to catching unwanted species, and are being phased out.

Sanford also sent two long-liners to catch Patagonia toothfish in the South Georgia fishing zone in the South Atlantic.

The vessel San Aspiring caught close to expectations, but San Aotea II catch results were below and it is now returning to New Zealand.

‘‘The cost of deploying these vessels to this remote fishery is ex- tremely high and when catch rates are poor, profitability declines quickly,’’ Barratt said.

In the Marlborough Sounds a period of slow growth in the main mussel growing area had led to lower production volumes and smaller mussels.

‘‘This lowers revenue per kilogram and increases production costs. The lack of volume is disappointing as market demand for mussels is strong and prices are high.’’

Within New Zealand quota species, catches were in line with expectations for the year.

Markets were strong and prices firm.

Sanford shares ended the day at $4.57, down 11 cents, or 2.3 per cent.