Covid bites Sanford profit for second year but recovery signs ahead

Net profit for Sanford was down 16 per cent. Photo / NZME

Covid lockdowns affecting the world's food services continued to reduce profitability in FY21 for Sanford, New Zealand's largest seafood company.

The NZX-listed company has announced net profit was down 16 per cent on the previous year at $16.2 million for the year ended September 30, while adjusted ebit of $23.3m was down 39 per cent.

Revenue increased 4 per cent to $489.6m.

Dividends remain suspended.

It's the second year Covid impacts have reduced the company's profitability but it is signalling signs of profit recovery in key markets such as wildcatch and salmon.

Chairman Sir Robert McLeod said Covid lockdowns around the world had hit the food service sector, where most seafood is consumed.

"The most significant impact this year has been to our mussels division, which depends on the half-shell format for its volume-based sales."

The company said mussels inventory had normalised in the latter part of FY21.

Chief executive Peter Reidie said supply chain reliability and costs remained challenging and the costs to supply had eroded margins.

"But we have been actively working to minimise supply chain risks and have recently agreed to a two-year arrangement with supply chain collaboration group Kotahi, which will take responsibility for all our frozen export capacity.

"This makes us much more confident about access to shipping," Reidie said.

With a new chief executive and chief financial officer Paul Alston in place, clear strategic priorities had been identified for FY22. It was planned to complete a strategic plan refresh by the first half of next calendar year.

Priorities in the months ahead were to rebuild mussel profitability; grow developing opportunities in wildcatch, retain salmon profitability and prepare for future growth, Reidie said.

Management was developing strategy through until 2026 and would present it to the market in the first half of next calendar year 2022.

Mussels provided around 20 per cent of full year revenue and was the weakest performing division. Sales volumes were up 4 per cent but revenue fell 16 per cent as inventory was cleared.

Wildcatch, the largest segment of Sanford's business, provided around 58 per cent of full year revenue, up 2 per cent year on year.

Stronger sales volume was partially negated by lower pricing.

With food service opening up again in the US, Australia and Asia, good growth demand was evident.

The proportion of salmon sold as super premium Big Glory Bay brand increased to 21 per cent of total salmon greenweight sales volume in FY21.