Maori Seafood Company Profit Higher Than Expected

5 January 2006

Maori Seafood Company Profit Higher Than Expected

Leading Maori seafood company Aotearoa Fisheries Ltd (AFL) has posted a higher-than-expected annual profit for the year ending 30 September 2006, the Chairman Rob McLeod said today.

In the first full-year report for the company, AFL posted a net surplus for the year of $16.5 million, almost $2m higher than predicted and $3m above the previous year. "AFL has had a year which has surpassed our expectations despite the current climate being neither politically or economically benign to the seafood industry," Mr McLeod said. "The increase is due mainly to AFL benefiting from the hard decisions and effort we have made since our inception."

AFL's major investment, Sealord, of which AFL is a 50 percent shareholder, reported sales of more than $600m for the first time and the company returned a Net Profit after Tax of $24.8m.

Mr McLeod said, however, the financial performance of AFL will continue to be affected by external factors over which the company has little control. This includes the high dollar, interest rates that rank among the highest in developed economies, a bundle of ever-increasing government compliance costs and high-energy costs.

The main reasons for the improved operating results have been:

. benefits from rationalisation of our processing facilities within the Inshore Division . an increased focus on high returning species and products in a fresh and chilled form; . new business growth within the Abalone Division ensuring optimum utilisation of our plant throughout the year; . strong volumes and margins in the Aquaculture Division with our pacific oyster business, and . a solid trading performance from Sealord.

Mr McLeod said AFL was at the forefront of environmental proposals during the year.

AFL and Sealord were two of the architects of a New Zealand fishing industry proposal to close almost a third of New Zealand's EEZ to protect the bio-diversity of the sea floor environment.

The industry advocated the establishment of 30 Benthic Protection Areas (BPAs) which are geographically representative of all deepwater marine environment classifications and equate to 31 percent of New Zealand's EEZ.

"This is the largest total closure to bottom trawl fishing within an EEZ ever undertaken in the World. Coupled with the fact that less than 10 percent of New Zealand's EEZ is bottom trawled, it represents massive protection for the marine environment," he said.

"It demonstrates the industry's willingness to work beyond its legislative responsibilities, which are to mitigate the impact of bottom trawling, as well as recognition of the need to protect a largely pristine and untouched benthic environment."

The industry views this as a comprehensive and far-reaching solution, unequalled anywhere else in the world.

"The Government has yet to commit to that view, and is ever-sensitive to the current anti-bottom trawl dynamic driven by NGOs. These NGOs are, in the main, not satisfied - or perhaps even aware - that 90 percent of the EEZ is untouched by bottom trawl fishing, but who want trawled areas returned to their natural state. This is the equivalent of suggesting that New Zealand should stop farming in Waikato and let the land revert to bush."

Mr McLeod said the 2006/2007 financial year will provide tough challenges for industry players, among them: . the high dollar which has been particularly debilitating for the fishing industry generally, . domestic inflation fuelled by the rise in mainly Government-imposed costs, . current constraints in the supply of purchased products and . interest rates which are at levels significantly higher than our trading partners..

In regards to allocation, Mr McLeod said 75.8 percent of the 100,000 AFL income shares have been or will be allocated to those Mandated Iwi Organisations (MIOs) on the basis of their relative share of the total Iwi population. MIOs receive income shares through the Maori Commercial Fisheries Settlement. As of 30 September 2006, Te Ohu Kaimoana, the Maori Fisheries Trust, had recognised 35 MIOs representing 56 Iwi.

The rate of recognition has exceeded many expectations and it is anticipated that a significant number of the remaining Recognised Iwi Organisations (RIOs) will reach MIO status and receive their AFL income shares in time for the 1 October 2007 fishing year.

Mr McLeod said that as Iwi grow their fishing assets, AFL and Sealord will be able to offer Iwi the resources, experience and support to manage their quota in accord with regulatory and compliance requirements. "By working together Iwi, AFL and Sealord can create a stronger supply base for international customers. Sealord's worldwide fishing, processing and marketing networks enable it to source and process northern and southern hemisphere seafood, to build on the New Zealand supply, and to get the most value from the seafood that it trades."

ENDS

© Scoop Media