Sanford almost doubles first-half profit; shares rise to month high

Sanford [NZX: SAN], the country's largest listed fishing group, almost doubled its first-half profit as it focused on lifting values over volumes and benefited from lower fuel costs and a weaker New Zealand dollar.

Profit jumped to $18.8 million, or 20.1 cents per share, in the six months ended March 31, from $9.6 million, or 10.2 cents, a year earlier, the Auckland-based company said in a statement. Revenue from continuing operations edged up 1.3 percent to $215.6 million even as sales volumes sank abut 20 percent as the company extracted more value from its catch.

Shares in Sanford rose 2.6 percent to a month high of $5.85.

Sanford chief executive Volker Kuntzsch, who joined the company in December 2013 with a 25-year career in the international fishing industry, is reorganising the group to focus on increasing value over volume, exiting unprofitable units and bringing the fisher closer to its customers. It sold its last Pacific Tuna vessel in the period, recognising a $5 million impairment charge after deciding to quit the "unsustainable" business, and said sales were impacted by lower catches of skipjack tuna and hoki as it moves to align supply with demand.

"The bottom line improvement resulted from favouring the production of chilled fish over frozen commodity wherever possible, aligning production with customer demand, a weaker NZ dollar and lower fuel cost," Kuntzsch said.

"While our 'focus on fresh' emphasises an increasing allocation of raw material to the chilled sector, we will continue to convert most of our wild catches and aquaculture harvests into frozen product for logistical reasons," the company said. "Through better alignment with our customer base and a move away from the commodity product market, we will maintain our focus on adding value to these products."

Sanford said a good high-value toothfish catch compensated for a 10 percent reduction in its overall wild catch during the first half as it had lower catches of pelagic fish such as mackerels and tuna and a variable performance of its fishing fleet.

In its aquaculture unit, which includes king salmon and greenshell mussels, the salmon harvest volume increased 8.6 percent and strong domestic demand for fresh salmon boosted values. However mussel growth was impacted by the El Nino weather pattern, leading to an increase in less desirable larger sized mussels and a delayed start to the season saw harvest volumes slip 30 percent from last year.

Sanford will pay a 9 cent dividend on June 17, unchanged from the year earlier.

(BusinessDesk)