FISHING company Sea Harvest yesterday reported resilient annuals as it navigated the choppy waters of Covid-19 to plate up a 24 percent dividend hike of 56 cents, as its different business segments delivered a mixed performance.
However, its chief executive, Felix Ratheb, yesterday flagged that the group’s outlook ahead was highly reliant on the outcome of the government’s 2021 Fishing Rights Allocation Process (FRAP).
The Department of Forestry, Fisheries, and the Environment late yesterday announced the allocations would be published on its website, adding that he successful 2021 FRAP right holders were required to commence with the process of applying for their new catch permits and ensure that all the Grant of Right Fees was paid on or before 60 days from the date of receipt of their right.
Sea Harvest said for the year ended December 31, 2021 its headline earnings, the main measure of corporate profit in South Africa, increased 4 percent to R439 million, while profit after tax rose 9 percent to R470m. Basic headline earnings per share (Heps) increased 4 percent to 157c. Earnings per share increased 9 percent to 168c per share.
The shares of Sea Harvest sailed to a high of R16.20 – 4.58 percent up after the news, but by midday trade the price had moderated to 0.06 percent. Over three years the shares are up 19.15 percent
Despite the ongoing volatility caused by Covid-19, Sea Harvest said it had once again proved its resilient and defensive nature in delivering revenue of R4.6 billion, 5 percent ahead of 2020, as well as a 10 percent hike in operating profit of R691m.
Ratheb said last year demonstrated the group’s sheer mettle against waves of continued uncertainty.
“While our different business segments delivered a mixed performance, the overall results are certainly pleasing, given that we had to navigate a world gripped by a pandemic for a second year running. We also succeeded in executing our growth strategies within our dairy business by increasing our production capacity in the powder and butter segments, and acquiring Mooivallei Suiwel to provide additional cheese capacity.
“We further completed the acquisition of 53.7 percent of BM Foods Group; thereby diversifying our South African food offering into new categories, including convenience and prepared foods,” he said.
Independent analyst Anthony Clark at SmallTalk Daily, said on Twitter @smalltalkdaily, “Prospects mixed due to oil costs + strong rand (but) recovery in food & aquaculture will aid.”
Ratheb said the group’s local fishing operations increased operating profit by 18 percent to R672m, with its operating profit margin expanding to 25 percent, despite a 5 percent reduction in the Hake total allowable catch in 2021, a 7 percent strengthening in the rand to the euro, and a 21 percent increase in the price of fuel. Offsetting this was improved fishing conditions, increased vessel availability, factory efficiencies, and R142m of hedge gains,
Cape Harvest Foods segment experienced significant organic and acquisitive growth in the reporting period with revenue increasing 28 percent to R1.3bn.
However, Sea Harvest noted that Ladismith Cheese faced significant headwinds during the period, and although revenue increased by 5 percent, the business was unable to fully pass on significant milk price increases, exacerbated by absorbing higher costs related to the increased installed capacity that could not be fully utilised in time. As a result, operating profit in the Cape Harvest Foods segment decreased 45 percent to R52m.
Ratheb said Sea Harvest’s fishing business in Australia enjoyed strong catches, resulting in increased volumes of its own wild-caught fisheries products.
Sea Harvest said critical to the group’s growth strategy in Australia was the acquisition of Australia-based fishing and related businesses of MG Kailis, a seafood business, which would help reduce the businesses cost-base and increase its market relevance in the region. This had resulted in an agreement on January 11 with the transaction expected to close on April 2.
Meanwhile, the aquaculture segment continued to face tough trading conditions with the curtailment of international air travel and resultant inflated freight costs from South Africa, together with continued lockdown restrictions in the Far East.
Despite this, additional abalone product formats and strong live abalone sales growth saw revenue increase 72 percent to R92m, with the segment reducing its operating loss to R64m.
To ramp up growth ahead, last year Sea Harvest implemented key changes in its executive management with a sales focus together with a streamlining of the core assets within its Aquaculture portfolio
Sea Harvest board chairman, Fred Robertson, praised the board and management team’s work “in the holistic approach adopted in managing the long-term sustainability of the business”.
BUSINESS REPORT ONLINE
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