Earnings fall but Sanford optimistic

Despite increased costs related to vessel operating costs and charter fees, markets for many fish species have improved. The price of hoki has been stable and pricing across a range of other species has improved. Photo / New Zealand Herald

Fishing company Sanford said a $12 million fall in revenue and $7.3 million rise in costs reduced its operating earnings by $19.3 million this year.

But the acquisition of Pacifica Seafoods on November 30 would generate a $10 million improvement in ebitda next year before the benefits of synergies are included.

Sanford yesterday reported earnings before interest, tax, depreciation and amortisation (ebitda) of $49.06 million in the year to September 30, down from $68.37 million in the same period last year.

Revenue fell 2.8 per cent to $421.1 million. The net profit attributable to shareholders was $25 million, down 36 per cent on last year.

The company declared a final dividend of 14c a share payable on December 15.

It said the increased costs related mainly to increased vessel operating costs, and higher charter fees on the basis of higher squid prices while foreign exchange variances reduced revenue by $40 million, countering higher volume.

Markets for many species improved in the second six months of the year.

"Over the last six months we have seen improved pricing across a range of species including greenshell mussels, salmon, snapper, orange roughy, toothfish, ling, squid, hake and southern blue whiting," the company said.

The price of hoki has been stable although competition in the Australian market has weakened prices there, while skipjack tuna prices have been highly variable.

"With improved demand and pricing for many species, we would expect to see an improved result for the 2011 year subject to the vagaries of the exchange rate regime.

"Recent strengthening of the New Zealand dollar against the US dollar towards US80c is of concern to all primary production exporters in New Zealand," the company said.

Sanford has Commerce Commission approval to buy Pacifica Seafoods, which operates more than 70 marine farms. The acquisition offered significant potential synergy benefits for Sanford, particularly in terms of export marketing and further processing automation, the company said.

"With the Pacifica acquisition being completed on November 30, 2010, we will have 10 months results from those operations which we estimate will generate a $10 million improvement in ebitda before the benefits of any synergies are included," the company said.

- NZPA