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Saturday 25 June 2022

Sanford’s H1 momentum dampened by domestic challenges

19th May 2022 By Bridget O'Connell | | @foodtickernz

Sanford has delivered strong first half results almost doubling its earnings from the same time last year, but warns it is not all smooth sailing as supply side challenges mount at its operations.

New Zealand’s largest seafood company posted adjusted earnings before interest and tax of $19.2m for the six months to March 2022 – a 79.4% jump from the $10.7m for the same time last year. Total revenue was $270.9m, up 16% on H1 2021 due to stronger pricing.

Peter Reidie

The earnings jump was largely driven by a doubling of the profit contributed by its wildcatch division as global demand for white fish bounced back, pricing significantly improved, and the company was able to deliver product even though volumes were slightly down.

Not so in its salmon division where its profit contribution remained flat on last year.

Sanford said continued volume and revenue growth seen in the first six months of its financial year was dampened by increased costs associated with managing the risks from warmer waters, increased feed costs, and Covid impacts on production and staffing levels.

Likewise at its mussel division. This was the last to be hit by Covid-related impacts, and subsequently the last to recover, according to Sanford, but volumes were on the up in the first half and the outlook was also for improved prices.

However, the company was still having to manage Covid-related disruption.

“The challenge we face is on the supply side with an increase in freight costs and with labour shortages in New Zealand impacting our ability to process our mussel products,” Sanford said.

Actual net profit at Sanford was $6.1m, down 55% compared with last year’s result, which was bolstered by property sales gains of $13.4m.

“The uplift in EBIT and revenue is satisfying and we are pleased we have been in a good position to take advantage of the post-Covid recovery in many of our international markets,” chief executive Peter Reidie said.

“Now the challenges we face have shifted from demand to supply, with Covid-19 continuing to make its presence felt in New Zealand. This is impacting our operations, particularly in processing where reduced staff availability has impacted productivity and increased costs.”

Reidie also addressed the higher salmon mortality levels – a problem that has caused serious issues for rival New Zealand King Salmon and its operations in the Marlborough Sounds.

“We are fortunate to farm our prized salmon in Stewart Island waters, where risks from warmer temperatures are reduced and are also being well managed by our farming team” Reidie said.

“Reduced stocking densities alongside aeration and oxygenation technologies have shown their value during the last six months, keeping seasonal mortalities across all fish at 3.5% from January to March.”

The company would not pay an interim dividend given the “early stage of the recovery”.



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