Sanford profit flat as some prices drop

Sanford saw half-year profit stall as increased sales of greenshell mussels were offset by declines in hoki, squid, salmon and skipjack tuna prices, and the fishing company took a $2 million impairment on its Australian operations.

On an earnings before interest, tax, depreciation and amortisation basis, the Auckland-based firm saw returns rise by almost $4 million to $29.89 million in the six months to March 31, compared with the same period a year earlier.

However, tax-paid profit was roughly static at $13.34 million, compared with $13.12 million in the previous period, reflecting a combination of higher depreciation, amortisation and impairment costs of $9.97 million ($7.52 million previously), increased net interest costs and a somewhat smaller gain on foreign exchange hedge contracts than in the same period a year earlier.

Currency gains from hedging delivered $3.49 million to the bottom line in the first half of the current financial year, compared with $4.33 million the previous year.

The result was achieved on a total sales increase to $230.3 million from $228 million.

Shares in the company closed the day down 1.3 per cent on $2.90.

On an ebitda basis, "price increases for hake, hoki, ling, greenshell mussels, skipjack tuna and squid were in most cases reduced or negated by the strengthened NZ dollar exchange rate", the company said.

Its average foreign exchange rate increased to US80c from US76c, compared with a year earlier.

While a US1c movement in the New Zealand dollar exchange rate equates to around $1.2 million in full-year ebitda, its hedging policy sees 70 per cent of US dollar sales hedged 12 months ahead, and 65 per cent of yen-denominated sales covered on the same basis, with lower levels ofhedge cover running into lateryears.

The company's profitability also suffered after its vessel the San Nikunau was seized by the United States Coastguard in December.

The San Nikunau was one of two Sanford boats detained in American Samoa, with the San Nanumea held over injury claims from current and former crew.

Sanford has vowed to fight "vigorously" the seven charges it faces, including obstruction of justice, after an investigation by the US Coastguard. The case will be heard in Washington DC in August.