Sealord profit falls 62% in 2015 on low global fish prices

Sealord's annual profit more than halved as sales slumped with low global prices weighing on New Zealand's second largest fishing company.

Net profit fell to $10.1 million in the year ended September 30, from $26.9 million a year earlier, according to financial statements for holding company Kura, lodged with the Companies Office. Nelson-based Sealord's 2014 profit was restated from $25.3 million over sales cutoff errors. Annual sales fell 4.3%  to $431 million.

Weighing on the bottom line was a $2 million impairment charge on investments, including a $1.5 million writedown on the value of its holding in North Island Mussels. Sealord sold its 50%  stake in the mussel company, along with its North Island marine farm licences, on October 9 last year to Japanese-owned food ingredients company Cedenco. Sealord had bought North Island Mussels out of receivership in partnership with Sanford in 2012. NZX-listed Sanford continues to hold the other half.

In a statement to BusinessDesk, Sealord said lower sales revenue was due to unfavorable foreign exchange movements.

"It has been a challenging year with a poor crop of mussels, softening global white fish pricing in the last quarter and vessel breakdowns, leading to a below expectation profit," said chief executive Steve Yung. "Our fishing capacity was restricted due to vessels being off the water during our peak season, which reduced both sales and profitability."

The company has declared a dividend of $4.05 million to shareholders, from $10.5 million last year.

In December, Sealord shareholder Aotearoa Fisheries said reduced earnings from its half-stake in the fishing contributed to a 27%  decline in its own annual profit. Aotearoa Fisheries said the contribution from Sealord, which it jointly owns with Japan's Nippon Suisan Kaisha, was lower than the $12.7 million it received in 2014, without giving details.

Sealord has been reducing the size of its workforce as it contends with lower fish prices, and this month announced plans to cut a further 60 jobs from its Nelson factory, on top of the 70 positions axed in December 2014. The latest accounts show personnel expenses fell to $85.8 million in 2015 from $86.4 million a year earlier.

The company started working with rival seafood company Sanford in 2015, sending out a vessel to catch orange roughy and sharing the catch and costs. Sanford called for more collaboration with other fishing industry players to help reduce their cost of business at their annual meeting earlier in December.

For Sanford, that included writing down the value of assets, closing an unprofitable mussel processing factory in Christchurch, and exiting its poorly performing Pacific tuna business.

(BusinessDesk)