Sanford posts 244pc lift in earnings, restarts dividend payouts

Seafood company Sanford has posted a big turnaround in annual net earnings. Photo / Greg Bowker, NZ Herald

Sanford, New Zealand’s largest seafood company, posted a 244 per cent per cent lift in annual net earnings but said its profitability was still below pre-Covid levels.

The company resumed paying a dividend - at 10c per share - after a two-year hiatus.

Sales revenue came to $531.9 million, up 8.6 per cent from the previous September year.

Sanford’s net profit was $55.8m, up from $16.26m, but assisted by the sale of crayfish quota in April.

Adjusted earnings before interest and tax for 2022 were $40.2m, up 72.5 per cent on the 2021 number, but down on pre-Covid levels of around $60m.

Chief executive Peter Reidie said the result reflected a careful approach.

“We needed to ensure we were in the right position to take advantage of lifting global demand,” he said.

“We have done that by being careful about our spending and very focused on our relationships in the diverse global markets we sell to,” he said.

“Now that we are able to travel again, we are spending more time with the people who buy our seafood and we have seen up close their enthusiasm for the quality of our products,” he said.

“We have not yet got back to our pre-Covid levels of profitability, but we have clearly turned the corner and it is pleasing to be growing and paying a dividend again,”

Sanford’s wildcatch division was a strong performer, with sales revenues up 8.8 per cent, and its profit contribution up 62.3 per cent.

“Deepwater has been the stand-out segment this year, although our inshore business has not been performing to expectations and, as part of our wider strategy, we are looking to change that in the year ahead,” Reidie said.

The mussels business suffered somewhat from the tight labour market, with its sales volumes down 4.4 per cent and profit contribution of $0.4m (versus $0.8m in 2021) also hurt by longer term contracts set when pricing was under pressure.

Salmon was the first division to recover from post-Covid lockdown impacts on flat volumes with growing revenue and an increase in its profit contribution of 20.6 per cent.

Net debt levels reduced to $145.5m (from $178.6m), but the company was still able to invest $53.8m into the business.

Chair Robert McLeod said the improved results enabled the board to return to paying a dividend to shareholders.

“It was necessary for us to take a prudent approach while our profitability was seriously constrained by the impact of Covid-related lockdowns on markets and trade,” he said.

Reidie said the prudent approach continued in other areas of Sanford’s business.

The company is in the process of contracting for a new vessel for its scampi fleet.

“We had originally planned to purchase three of these vessels up front but have decided that a one-at-a-time approach will be more appropriate, given our performance,” he said.

Sanford released its refreshed strategy for the next five years in June.

Its strategic priorities are to grow its salmon and mussel divisions, sustain deepwater, and to turnaround inshore operations.

The work in progress includes examining the structure of Sanford’s business divisions to enable each of the units to focus on delivering its own profit and loss results.

Sanford is just under 20 per cent owned by Ngai Tahu Investments.