Sanford considers casting more offshore

Bruce Cole (left) and Eric Barratt prepare to face Sanford shareholders. Picture / Greg Bowker

Fishing company Sanford will consider moving more processing overseas or pulling out of some fisheries if the dollar remains high.

Managing director Eric Barratt said the company could look to move away from more high-risk and high-reward ventures.

"You just say 'well look, we've got enough fluctuation in our core New Zealand business, so let's get out of some of the overseas investments or boats or whatever'."

Sanford's business strategy is based on an exchange rate of 60USc to one kiwi dollar, therefore it has been hit by the local currency's strength.

"While the New Zealand dollar is above US65c we will not be in a position to deliver adequate returns," Barratt told shareholders at the company's annual meeting in Auckland yesterday.

He said the company could move more of its fish processing work overseas if the dollar did not fall, but there was no magic exchange rate level at which it would do this.

"It's more likely to be just a prolonged period where trading in other species is difficult and maybe we decide that we need to take that action," Barratt said.

Sanford has some processing facilities in China but the majority in New Zealand, where it employs 624 people, says the company's latest annual report.

Barratt was confident the exchange rate would fall.

"At the moment, we are sitting on a cliff where the dollar is being held up unrealistically," he said.

Director Bruce Cole said sales in the first three months were down 5.9 per cent on last year, but the long-term outlook was more positive.

He said when the effects from reduced foreign exchange gains were removed, the company was 3.4 per cent ahead of last year.

Barratt said that although seafood prices were stable, they were at a low level - about the same in dollar terms as 10 years ago.

"And, of course, since that time the cost of fuel, labour, packaging, electricity and Government charges have increased dramatically."

Barratt said business during the last year had been "affected too much" by the high dollar.

"We do, of course, have debt that we need to service and we like to reward our shareholders as well," he said.

After forward foreign exchange cover ran out about a month ago, the company had begun trading on the daily rate. "We are attempting to manage our repatriation in a way that maximises the New Zealand dollar returns by picking the lows in the present high currency."

Barratt was positive about the future of fishing quotas, which were mostly stable and well managed.

"Our company's philosophy is to take a conservative approach on quotas ... We want to be confident that the hoki resource has well and truly recovered before we see a quota increase."

Catches and aquaculture harvest were running 3 per cent ahead of last year, with better deep water and international fisheries catches offset by lower mackerel and skipjack tuna catches by the Tauranga-based inshore purse seine fleet.

Cole said the final results for the year would depend on success in key fisheries, including skipjack tuna and squid.

Early catches of squid had been good, but access to resources in the southern Auckland Island waters "continue to be hampered by irrational environmental management decisions in respect to sealions and trawling restrictions ..." he said.