Sanford annual profit more than doubles on weaker kiwi, cheaper fuel

Wednesday 16th November 2016

Sanford, New Zealand's largest listed fishing group, more than doubled annual profit as a weaker kiwi dollar and cheaper fuel bolstered earnings in the face of a smaller catch, and as year-earlier impairment charges weren't repeated.

Net profit rose to $34.7 million, or 37.1 cents per share, in the 12 months ended Sept. 30 from $13.8 million, or 14.8 cents, a year earlier, the Auckland-based company said in a statement. Revenue rose 2.9 percent to $463.5 million, even as the volume of its catch shrank 11 percent as the company extracted more from a higher-value catch and a weaker kiwi generated bigger export receipts.

Sanford booked impairment and restructuring costs of $5.6 million in the year, down from $16.4 million in 2015. The company sold its last Pacific Tuna vessel in the first half, recognising a $5 million impairment charge after deciding to quit the "unsustainable" business.

"While the reported net profit for the year is satisfying and we have made good progress on our journey from being a fishing company towards creating an added value seafood company with attendant increasing profit returns, our profitability is not yet at a level where the company can prudently fund an increase in the dividend," chairman Paul Norling and chief executive Volker Kuntsch said in their report.

"Notwithstanding the desire of shareholders for an increase, the board has concluded to keep the dividend unchanged at 23 cents per share in favour of reducing net debt to a more acceptable level following the upgrading of our fishing capacity during this past year with the purchase of two additional fishing vessels at a cost of $27.8 million," they said.

The board declared a final dividend of 14 cents per share, payable on Dec. 9 with a Dec. 1 record date.

The shares fell 0.3 percent to $6.39, though the statement was only made to the market 10 minutes before trading closed.

Kuntsch and Norling said Sanford will continue to scale back the "commodity nature" of its portfolio with New Zealand's seafood industry holding "great potential for adding substantial value to the economy." Increased transparency and communication will be keys to lifting the sector's reputation.

The government is currently seeking feedback on overhauling the country's quota management system, which was criticised after an independent review found the Ministry for Primary Industries was reluctant to prosecute companies for dumping fish.

BusinessDesk.co.nz

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