Sanford to sell inshore fishing business, profit almost doubles

Sanford said global salmon sales were strong, and so was demand. Photo / Sarah Ivey

Seafood company Sanford is looking to sell most of the inshore area of its wildcatch division to Moana New Zealand through a long-term agreement valued at $11 million to $13m for five years.

The company announced the conditional sale while reporting its half-year result which saw its profit almost double to $11.1 million in the six months to March, although profitability overall was still not at pre-Covid levels.

Sanford announced an interim dividend - 6c a share - after not paying one in the previous comparable period.

Sanford said its North Island inshore operations represented a relatively small part of its business, but the deal would “reduce the negative impact these operations are currently having on Sanford’s bottom line”.

It is conditional on the Commerce Commission granting Moana clearance in respect of the transaction and Sanford agreeing terms for discontinuation of toll processing with an existing toll processing customer.

Under the deal, Sanford will retain ownership of the quota for these North Island species. Sanford also continues to hold quota in several deepwater and South Island inshore fisheries.

Auckland-based Sanford holds about 20 per cent of New Zealand fishing quota and has interests in salmon and mussel aquaculture.

Chief executive Peter Reidie said Sanford had sought the proposed deal with Moana following a comprehensive review seeking to turn around its North Island inshore operations.

“We signalled some time ago that we have been looking at ways to turn around this part of our operations,” he said.

“The long-term agreement with Moana will enable them to fish and process inshore species at scale.”

The deal also includes two of Sanford’s North Island-based fishing vessels and a selection of processing equipment and refrigerated vehicles/trailers used in the fishery.

Moana chief executive Steve Tarrant said Moana was well-placed to take on additional catch rights and processing volumes.

The deal involves Moana acquiring Sanford’s Annual Catch Entitlement (ACE) for much of its quota of North Island inshore species.

Moana will also take over the catching, processing and selling of fish utilising this ACE.

Inshore fisheries are those out to 12 nautical miles (22.2km) from the New Zealand coast.

Wildcatch underperforming

“While the deepwater part of the business is stable and profitable, unfortunately the inshore area of Sanford’s wildcatch division has been underperforming for some time,” chief executive Peter Reidie said.

Moana is the half owner of Sealord, with the other half held by Japanese firm Nissui Corporation.

The arrangement would be for a minimum term of approximately 10 years.

Settlement is in the fourth quarter of this year.

In its result, Sanford said its adjusted earnings before interest and tax (ebit) for the half was $26.6m, a 38.7 per cent increase on the same period last year.

Revenue of $277.6m was, up 2.5 per cent.

The salmon division was particularly strong, with a 45 per cent increase in profit, while wildcatch again remained steady. Mussels continued to lag behind expectations.

Reidie said despite improvements, labour shortages and cost pressures meant Sanford had not yet returned to pre-Covid levels of profitability.

Sanford, New Zealand’s largest and oldest seafood company, said there had been encouraging growth in global sales and demand was strong across the board.

“This ranges from our highly valued scampi and salmon to more everyday products such as hoki and squid,” he said.

“We have seen record pricing in the period for all these species and more.”

Sanford’s focus in the half has been to restructure the business into three divisions: wildcatch, salmon and mussels.

Reidie said overall, there had been significant performance improvements but the company was focused on achieving more, “and on mitigating or eliminating the issues that have held back a more rapid return to desired profitability”.