Sea Harvest reports muted growth in earnings

SEA HARVEST yesterday credited the resilience of its portfolio, despite reporting single-digit growth in earnings for the year to the end of December, driven by fishing operations in South Africa and Australia.

The vertically integrated fishing and food company reported a 3 percent rise in headline earnings to R420.91 million.

Basic headline earnings per share were up 2 percent to 150.8 cents a share, negatively impacted by Covid-19, which resulted in disruptions to markets and supply chains.

However, group revenue surged 10 percent to R4.4 billion, benefiting from good performances from the South African fishing segment, the Cape Harvest Foods segment, which includes Ladismith Cheese, and the Australian operations. But this was offset by continued challenges in the aquaculture segment, which was severely impacted by the effects of Covid-19.

Chief executive Felix Ratheb said the group proved the resilient and defensive nature of its business.

“Our fishing business is very well diversified in terms of markets, supplying a variety of products to 36 countries across the globe. Within these markets, the group has a strong mix of retail and hotels, restaurants and catering customers. What we managed to do very effectively is divert products to retail markets where demand was firm. This flexibility was a significant strength in these difficult times where out-of-home consumption was severely affected with various lockdowns,” Ratheb said.

However, he said challenges were experienced in the aquaculture segment, which was hard hit by Covid-19.

“The group’s inability to access markets in the Far East due to lockdowns and curfews in the region, as well as the curtailment of air freight from South Africa, resulted in a significant loss in that business,” he said.

The group reported a 5 percent increase in operating profit to R629m despite the supply chain disruptions, including lower throughput and lower levels of productivity, higher selling and distribution costs, a shift in market mix, and R39m in Covid-19-related direct costs.

The group maintained last year’s dividend of 45c a share.

In the South African operations, revenue rose 12 percent to R2.76bn, while the Cape Harvest Foods segment increased revenue by 3 percent to R1.02bn.

Sea Harvest Australia delivered a 24 percent increase in revenue to R543m, while revenue in the aquaculture segment fell 23 percent to R53m.

The group said although markets were more settled since the first outbreaks of Covid-19 in December 2019, and living with Covid-19 becomes the norm, it was difficult to estimate the impact of the pandemic on its supply chain and markets.

“Retail markets are expected to continue to be firm, while the ramp-up of food service markets is expected to occur over an extended period,” the group said.

Sea Harvest shares closed 1.2 percent lower at R14.81 yesterday.