Sanford first-half profit falls 18% on mussel plant closure, fleet write-downs

Sanford [NZX: SAN], New Zealand's largest listed fishing group, reported an 18% drop in first-half profit as it wrote down the value of its fleet and Christchurch mussel processing plant.

Profit fell to $9.6 million in the six months ended March 31, from $11.7 million a year earlier, the Auckland-based fishing company said in a statement. Sales increased 0.1% to $226 million, while earnings before interest, tax, depreciation and amortisation rose 18% to $33.9 million. The company took impairment charges totalling $6.8 million on its fishing fleet and the mussel processing facility in Christchurch, which it plans to close.

Sanford operates across the fishing industry, including inshore and deepwater fishing and processing, aquaculture operations farming salmon and mussels, and three international tuna vessels. The company has struggled against falling commodity prices for its skipjack tuna, blue mackerel and other oily fish, which in part has been offset by strong demand for its deepwater fish catches and stable prices for its greenshell mussels.

"We are moving to being a food company rather than just a fishing and marine farming company and this comes from being focused firmly on what our customers want," chief executive Volker Kuntzsch said. "Offering a growing share of our precious marine resources as high-quality fresh seafood to an increasingly discerning customer base seeking product from sustainable sources is one of the elements that we define as adding value."

In April the company said it was in consultations with 232 staff likely to lose their jobs at the company's Christchurch mussel processing plant, which Sanford estimated would cost about $2 million. Recent weather patterns have impacted on natural spat (offspring) supply for several seasons to the point where the company had to reconsider its mussel processing capacity.

The company said the current lower mussel prices and supply will affect the aquaculture business, although should be offset by efficiency gains.

Sanford shares were unchanged at $4.77 and have fallen 0.6% since the start of the year.

The board declared an interim dividend of 9c a share, payable on June 19, with a record date of June 12.

(BusinessDesk)