Earnings before interest and tax (EBIT) are NZD 64.8 million (USD 41.4m), compared to NZD 64.7 million (USD 41.3m) in 2018

Sanford posts ‘a good outcome’ for FY2019, though below original expectations

NEW ZEALAND
Monday, November 18, 2019, 02:30 (GMT + 9)

New Zealand’s largest seafood company Sanford Limited  has reported net profit after tax (NPAT) for the financial year ending September 30, 2019 of NZD 41.7 million (USD 26.6m), compared to its 2018 result of NZD 42.3 million (USD 27m).
 
Sanford’s underlying (adjusted) earnings before interest and tax (EBIT) are NZD 64.8 million (USD 41.4m), compared to NZD 64.7 million (USD 41.3m) in 2018. Sales revenue however, increased to NZD 558 million (USD 356.3m) on a like-for-like basis-, up 8% from NZD 515 million (USD 328.8m) in the prior year, despite sales volume decreasing by 5% to 115,000 tonnes.

CEO Volker Kuntzsch says that while the result did not meet original expectations, it was a good outcome following a difficult year and certainly confirms that Sanford has adopted the right strategy for challenging times.

"Climate change is the number one risk we face as a business. We see the consequences of warmer waters and adverse weather conditions playing out in the oceans and on our bottom line. In this situation, it is important for Sanford to be doing the right thing on the water to ensure we fish sustainably, and also to be vigilant and agile so that we are best placed to manage these changes.

"Our strategy to mitigate this risk through investing in innovation across the business and bringing our customer focus to life at the same time is clearly bearing fruit. Achieving significant top line growth with reduced volumes strongly aligns with our strategic direction."

Among the challenges faced by Sanford in 2019 year was the sad loss of crew member Steffan Stewart in a tragic accident on the deepwater vessel, the San Granit. Sanford removed the vessel from operations for three months to complete a further and even more highly detailed risk analysis of all factory equipment and processes, despite having already had extensive adjustments made to the vessel to align it to regulatory safety standards prior to its addition to Sanford’s fleet.

F/V San Granit | Photo: Sanford

The three-month tie-up of the San Granit meant a reduction in catch volumes as did the decision by Sanford to support an industry initiative to voluntarily forgo 20,000 tonnes of hoki quota on the West Coast as a precautionary sustainability measure. These volume reductions could only partially be compensated for through higher catches of species like squid and product mix improvements on board the deepwater fleet.

►Sanford Ltd holding 19% of the total NZ quota

The Precision Seafood Harvesting (PSH) fishing method has been approved by the Ministry for Primary Industries (MPI) for use in inshore and in deepwater fishing and has since been deployed across Sanford’s fleet. This New Zealand-developed fishing gear is a game changer in world fisheries, delivering a superior quality of product through its gentler method.

In the face of algal blooms limiting harvests in the Marlborough Sounds, Sanford’s mussel business posted an encouraging result on the back of stronger volumes, sales channel focus and product diversification. The mussel powder operation was boosted with the launch of the Sea To Me nutraceutical brand. The company has confirmed its intention to make a substantial investment in a marine extracts facility in Blenheim in 2020.

Photo: Sanford Ltd.

Sanford’s salmon division delivered a very good result, due to stronger volumes and value realisation. This was partly driven through its Big Glory Bay brand which is now on offer on menus in high end restaurants in New Zealand and the US. Sanford has been granted a consent variation for its Stewart Island salmon farm which will allow it to farm up to 30% more fish over the next three years. The salmon business was challenged by an algal bloom causing higher mortalities and a management plan is now in place to deal with climate change related risks in Big Glory Bay.

Photo: Sanford Ltd.

Sanford Chief Financial Officer Katherine Turner says despite reporting flat year-on-year EBIT, 2019 has been very successful in achieving other key milestones.

"We have laid the foundation for further value creation by realising a number of operational projects, for example the sale of our pelagic business in Tauranga and the footprint optimisation in Southland. Furthermore, the innovation and value strategies are proving themselves, and we are now focusing on investing into our scampi fleet and the marine extracts facility.

Photo: Sanford Ltd.

The opening of the refurbished Auckland Fish Market in the city’s rapidly growing Wynyard Quarter earlier this year went really well and highlights our increasing focus on consumers. It includes our Sanford and Sons Fishmonger where we showcase our wonderful seafood to the public."

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