High dollar reels in warning

Fishing company Sanford spelled it out for shareholders at the annual meeting in Auckland yesterday: if the dollar is above 60USc in eight months' time, things will start to get ugly.

Company chairman Douglas Goodfellow told the crowd of more than 200 at the Ellerslie Convention Centre that the financial year starting on October 1 could be "very difficult" if the dollar did not fall.

Managing director Eric Barratt said the company would not make an "adequate" return if it stayed above US60c but, quizzed after the meeting, would not be more specific on what that meant.

The dollar was yesterday trading at 71.2USc. It last traded under 60USc in May 2004.

In the past two financial years, Sanford has made $90.9 million from currency hedging and the company is hedged again this financial year - but fully exposed in the next one.

With a touch of whimsy, Goodfellow - the ageing patriarch of the family that is a major shareholder in Sanford - urged shareholders to do what they could to get the exchange rate down.

Sanford is one of the country's largest fishing companies with a market capitalisation - the total price of all the shares on issue - of $425 million.

Goodfellow said sales for the first quarter of this financial year were about 8 per cent higher than last year, with fishing catches and aquaculture production "up to expectations".

Barratt called that encouraging but said key influences on the final result would be the success of the skipjack tuna and squid catches and, to a lesser extent, the exchange rate.

Sanford is not known for a culture of openness and there was a reference by Barratt to a newspaper bestowing - unfairly, he suggested - a "Top Secrecy Award" for just that reason.

There was a small update on last October's $137 million acquisition of Simunovich Fisheries, the biggest deal in Sanford's 100-year history.

The company said the integration of the assets had gone smoothly and the expected revenue from them in the first year was about $40 million.

Sanford financed the deal with a $150 million ANZ loan.

Goodfellow said the company would keep looking for expansion opportunities here and overseas.

The company still awaits approval from the Minister of Fisheries for the transfer of a final chunk of the Simunovich scampi quota, of which it is confident.

On a different topic, Goodfellow said confidentiality obligations prevented him from explaining why merger discussions with Sealord had failed.

The mood of the meeting was supportive.

Sanford shares closed up 6c at $4.45.