Covid 19 continues to bite Sanford's seafood earnings as mid-year results echo earlier guidance

Sanford says trading headwinds continue for greenshell mussel exports. Photo / File

The coronavirus pandemic continues to challenge the performance of seafood business Sanford, which has reported a mid-year 15 per cent fall in net profit after tax and falls in revenue and operating earnings.

Net profit after tax for the six months to March 31 was $16.2 million, which included a $13.3m gain on the sale of two non-core properties. Npat for the same period last year was $19m.

Revenue decreased 5 per cent to $233.5m.

Adjusted earnings before interest and tax for the half year were 54 per cent down at $10.7m on the corresponding period, a period the exporter said largely preceded the impact of Covid-19. Reported earnings before interest and tax was $10.2m.

The company said the results were consistent with its recent market update.

No interim dividend was declared.

Overall conditions during this half year were similar to the pandemic-affected second half of FY20, which had adjusted ebit of $15m, a similar year-on-year decrease of 53 per cent.

The company said its second half tended to be seasonally stronger, and it expects the same trend in FY21.

New chief executive Peter Reidie, who took up the job in April, said lockdowns and Covid responses worldwide have had wide-ranging impacts, affecting foodservice demand, prices, labour and supply chains, particularly freight.

However, there were some early positive signs as markets started to reopen and new markets gained momentum.

Performance became more differentiated in divisions during the half year, with the wildcatch and salmon markets beginning to show early signs of recovery, particularly in volume. These divisions had been impacted early in the pandemic.

However, prices for mussels, which had held up in the six months to September 2020, had come under substantial pressure during this half year due to an excess of supply over demand.

Wildcatch profitability remained below pre-Covid levels due to reduced global demand undermining price. This division had started to stabilise with wildcatch's profit contribution largely unchanged.

Reidie said salmon volume was improving, with efforts to switch into the retail channel last financial year starting to pay off. Salmon produced revenue growth of 12 per cent compared to the 2020 half year, and was up 39 per cent on the second half of 2020.

Greenshell mussels had the highest exposure to foodservice and was most affected by the Covid-19 outbreak because of restrictions on restaurants.

Mussels were expected to lag in their recovery, with pricing expected to remain under pressure for the rest of the financial year, Reidie said.

Supply chain costs had increased overall by 12 per cent on a cost per tonne basis, mainly due to airfreight costs.

No short-term relief in global freight congestion was expected.

Net debt at $181m was $3m lower than September 2020 and gearing ratio - debt as a proportion of debt plus equity - was 23.8 per cent, compared to 23.4 per cent at September.

"We want to get out of the second half of this year in better condition that the second half of last year," Reidie said.

"We will make sure we do things that deliver on that - managing our portfolio and selling products to markets that are opening (post-lockdowns) fastest and are the most attractive.

"(We want to) get a clearer view of the opportunities ...define those and prioritise those in the order of making the most of them, being able to resource them and put them in an order we know we can deliver on."

Reidie said there was no shortage of opportunities.

They were in value added products but also in commodities through operational efficiencies, managing the portfolio and getting the right product to the right market.