Sanford suspends dividends as profits drop for second year - Stuff.co.nz

Sanford Limited/Supplied

A strong fourth quarter for salmon saw overall revenue increase 32 per cent on previous years, with Stewart Island farmed Big Glory Bay salmon growing to 20.8 per cent of salmon green weight sales volume. [File photo]

Seafood company Sanford Limited will not be paying final dividends to shareholders as Covid-19 pushes net profits down for the second year.

The Auckland-based fishery released its full year results to September 30 on Thursday, reporting a net profit after tax of $16.2 million, down 16 per cent on the previous 12 months.

Adjusted earnings before interest and tax (EBIT) fell to $23.3 million, a 39 per cent reduction on 2020 figures, whilst net debt fell from $184.3 million in 2020 to $178.6 million.

It's an improvement on the company's 2020 results, where profit after tax fell 46 per cent on the previous year.

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Sanford Limited chief executive Peter Reidie said whilst the overall results were disappointing, he felt positive about the company's management of net debt and ability to deliver operationally through Covid-19.

"Supply lines have remained erratic and while demand has been slowly rebuilding, the costs to supply have eroded margins. It is not a good story. But we cannot lose sight of the fact that profits have been made, despite the demand slump. We have seen the bottom of the trough, and the test now is how quickly we can move out of it," he said.

"While we have seen a lag in the recovery of our mussels division, we have also seen our wild catch and salmon divisions beginning to improve and mussels inventory finally normalising in the latter part of 2021, as the pandemic response has evolved globally."

Mussels revenue was down 16 per cent on the previous year, whilst a strong fourth quarter for Salmon saw its overall revenue increase 32 per cent on last year.

Priorities in the months ahead would be to rebuild mussel profitability, grow developing opportunities in wild catch and to retain salmon profitability whilst preparing for future growth, he said.

Reidie expected to see continuing recovery in all divisions as the world reopened and demand returned, but did not discount ongoing Covid-19 related risks in the supply chain as global shipping schedule reliability fell to below 40 per cent, after falling to 44 per cent last year from 68 per cent pre-Covid-19.

A new arrangement with supply chain collaboration group Kotahi, who will be responsible for all frozen exports, is expected to help ease supply chain issues, he said.

Sanford Limited/Supplied

Sanford Limited board chairman Sir Robert McLeod expects the company to return to pre-Covid-19 levels in 2023. [File Photo]

Sanford Limited board chairman Sir Robert McLeod said the major cause of reduced profitability was a reduction in worldwide demand for seafood due to the effect of Covid-19 restrictions on the food service sector.

The European market, Sanford's largest export market in 2020, fell from taking 12.6 per cent of sales volumes to 9.1 per cent as Covid-19 disrupted food service, cruise liners and the education sector.

However, vaccinations and reductions in lockdowns in key markets have resulted in a resurgence of customer demand, he said.

"The board and management believe that the adverse impact of Covid-19 is temporary and not permanent," he said.

"We are looking to improve profitability in our 2022 financial year and return to pre-Covid-19 levels in 2023. The Board is positive about our future, despite the near-term remaining challenging."