Sealord $34m profit comes with warning

By IRENE CHAPPLE


Nelson-based Sealord, New Zealand's largest fishing company, will today report a provisional $34 million net profit but sound warnings for the year ahead.

Sealord, which is owned by Te Ohu Kai Moana and Japanese company Nissui, owns 64,000 tonnes of hoki quota, which makes up around a third of its sales.

Hoki quota is expected to be cut by between 22 and 44 per cent, effective from October this year - a policy change which will directly affect Sealord's bottom line.

Around half of this year's result was related to foreign exchange hedging contracts which will be far less favourable in the year to come.

Te Ohu Kai Moana chairman Shane Jones said the outlook for the coming year was "very challenging" and earnings for the 2004-2005 year were forecast to come in between $30 million and $34 million.

The company would protect earnings by focusing hoki sales in markets such as Asia and the United States, where premiums could be commanded. Product being sourced from outside New Zealand would also be offset against the domestic quota cuts.

The financial results are being presented at a hui today in Wellington.

The 2004 results are an increase from $5.8 million in 2003 but that included $24.1 million of abnormals after the company wrote off $11.9 million from an unsuccessful venture in Argentina.

Revenue is down from $598.8 million to $582.7 million.

Sanford, New Zealand's only listed fishing company and former paramour of Sealord, also struggled over the year. Much of its $47 million net profit to the September 2003 year end was due to its hedging contracts.

The two companies discussed merger plans but they collapsed in April.

The industry has struggled with unfavourable exchange rates, low international prices for its products and high fuel prices.

Jones said the results were pleasing given the industry's negative external factors and were due to a focus on adding value, cost control and productivity.

Today's hui will also discuss the creation of Aotearoa Fisheries Limited (AFL), which will control about 39 per cent of the $1.5 billion fishing industry.

AFL, which will be an umbrella company incorporating Te Ohu Kai Moana's share of Sealord plus other Maori fisheries assets, will be established once the Maori Fisheries Bill becomes law in October.