A difficult year marked by a crew tragedy and a 5 per cent dip in catch volumes has seen New Zealand's biggest fishing company Sanford report a flat net profit after tax but achieve higher revenue on lower sales.
Net profit for the financial year to September 30 was $41.7 million, compared to $42.3m the previous year.
Earnings before interest and tax were $64.8m, compared to $64.7m, while sales revenue lifted 8 per cent to $558m.
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The full-year dividend was held at 23c due to the company's need for capital investment and operational spending. The final dividend is 14c per share.
The result included a net gain of $5m on the sale of the company's pelagic or open sea business quota and assets.
Sales volumes were down 5 per cent due to deepwater vessel San Granit being removed from operation for a three-month safety analysis after crew member Steffan Stewart suffered a fatal accident, and after the company supported an industry initiative to forgo 20,000 tonnes of hoki quota on the West Coast as a sustainability measure. Algal blooms in the Marlborough Sounds at Stewart Island added to the challenges.
Chief executive Volker Kuntzsch said while the result did not meet original expectations, it was a good outcome following a difficult year and confirmed Sanford had adopted the right strategy for the challenge of climate change and the onus to fish sustainably.
"Climate change is the number one risk we face as a business. We see the consequences of warmer waters and adverse weather conditions playing out in the oceans and on our bottom line," said Kuntzsch, a finalist in this year's Deloitte Top 200 chief executive of the year.
"In this situation, it is important for Sanford to be doing the right thing on the water to ensure we fish sustainably and also to be vigilant and agile so that we are best placed to manage these changes."
Sanford's strategy of investing in innovation across the business and sharpening its customer focus was bearing fruit, he said.
"Achieving significant top-line growth with reduced volumes strongly aligns with our strategic direction."
Chief financial officer Katherine Turner said the company moved marginally closer to its goal of $1 profit (ebit) on every kilogram caught or harvested or sold, with the 2019 number at 56c, 2c up on the previous year.
Operating expenses were $4.9m higher than the previous year, reflecting Sanford's signalled investment in people, training, research and development, information technology and marketing.
Operating cashflow of $48.7m was lower than last year's $72.4m, due to the timing of tax payments and a return to normal working capital levels after an earthquake event at the Havelock site.
The company spent $38.3m on capital, and in line with its signalled intention to invest $120m over the 2019 and 2020 financial years, the cashflow spend on growth and asset rejuvenation was expected to ramp up significantly in 2020, Turner said.
Net proceeds of $24.3m from the pelagic business sale and $9m from the sale of an investment in the China-based processing plant Weihai Dong Won improved the company's gearing ratio from 27 per cent to 24 per cent and strengthened the balance sheet for the capital investment programme.
Despite algal bloom in Marlborough, greenshell mussel revenue rose 13 per cent on 3 per cent sales volume growth.
The salmon division delivered a strong result with a 23 per cent increase in revenue on sales growth of 16 per cent.
Wild catch sales volume fell 9 per cent but recorded a 7 per cent lift in revenue.
Turner said Sanford was feeling "quietly optimistic" about the coming year against a backdrop of global uncertainty.
"Our result this year has demonstrated we are on the right track with our strategy, building increasing resilience into the business as we also focus on quality over quantity... progress is good but we are not their yet.
"There is more work to be done to improve our margins by reducing and containing our fixed costs and to recover our investments in sales and marketing through focusing our customer base around value."