Sanford annual profit falls 6.7% on mussel farm restructuring; US law suit take toll
By Paul McBeth
Nov. 28 (BusinessDesk) - Sanford, the country's second-biggest fishing company by sales, fell 6.7 percent after it took
charges on restructuring its Coromandel mussel farm and legal fees for its unsuccessful defence of claims it dumped
waste oil off American Samoa.
Net profit fell to $20.9 million, or 22.3 cents per share, in the 12 months ended Sept. 30, from $22.3 million, or 23.8
cents, a year earlier, the Auckland-based company said in a statement. That included a $2.6 million writedown on its
North Island Mussel Processors investment and a provision of up to $5 million in legal fees and fines in the US
Department of Justice prosecution. Sentencing is scheduled in January next year.
The result met Sanford's October guidance, when the fishing company downgraded its annual earnings expectations to
between $20 million and $21 million having previously signalled an improved second half. Its Pacific tuna operation was
hit by a lack of fishing time from two of its three vessels, one of which was detained due to the US prosecution and the
other needing an upgrade.
"Events of the past year neutralised our expectation of improved returns this year," managing director Eric Barratt said
in his commentary. "We have outlined the impact of those events and believe that we can continue to be positive about
prospects in the coming year."
The shares fell 1.1 percent to $4.40 in trading today, and have gained 8.8 percent this year. The stock is rated an
average 'hold' based on four analyst recommendations compiled by Reuters, with a median target price of $4.86.
Sanford's revenue slipped 0.9 percent to $460 million in the year, with smaller contributions from markets in Australia,
Europe and North America while sales into Asia picked up across the board. The company fattened its gross margin to 18
percent from 16 percent a year earlier.
Barratt said both local and export markets were firmer for inshore fish species, though the strong currency "continues
to be a challenge." Deepwater operations were the main contributor to earnings.
"The inshore and deepwater operations are expected to continue to provide strong contributions through ongoing focus in
business improvement and increased catching efficiency," he said.
The board declared a final dividend of 14 cents per share, taking the annual payment to 23 cents.
(BusinessDesk)