Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Sanford’s move up the value chain overcomes vicissitudes

Sanford’s move up the value chain overcomes climatic vicissitudes

By Jenny Ruth

Nov. 15 (BusinessDesk) - Sanford says annual earnings fell short of its expectations due to “challenging” climatic conditions leading to a decline in harvest volumes.

However, that impact was more than compensated for by the company’s efforts to extract more value from both its wild and farmed fish and seafood and its underlying earnings rose 1.5 percent.

The fishing company lifted net profit 12.9 percent for the year ended September to $42.3 million, but that was largely driven by an insurance settlement for damage caused to its Havelock mussel processing facility by the Kaikoura earthquake in November 2016.

Sales rose 7.7 percent to $515 million in the 12 months, “driven by improved pricing across farmed and wild-caught species, an increase in our fresh sales,” and its ability to produce higher-value products, primarily from its hoki catch.

The profit result coincided with disclosure this morning of the death of one of its employees on a deepwater factory vessel, the San Granit. The company said the facts were still being established.

Chief executive Volker Kuntzsch says the climate has had a greater impact than Sanford has previously experienced, with abnormally high water temperatures during summer affecting both aquaculture and fishing.

Nevertheless, the company was able to maintain profitability by earning more per kilo of fish and earnings before interest and tax per kilo rose from 57 cents to 63 cents.

“Volumes were down in salmon, mussels and wildcatch, both inshore and deepwater, but our strategic focus enabled us to make progress on our goal of $1 ebit per kilo greenweight,” Kuntzsch said.

That excludes commodity volumes caught by Sanford’s fishing partners.

Harvest volumes of mussels fell 15.1 percent due to an autumn algal bloom in the Marlborough sounds producing bio toxins, which interrupted harvesting and led to early spawning. The Havelock processing facility also closed earlier than usual to allow for earthquake repairs.

Sanford also grows mussels in the Coromandel and Stewart Island.

The summer marine heatwave affected growth and mortality rates at its Big Glory Bay king salmon farm at Stewart Island and the company limited sales for up to 10 weeks to enable fish stocks to reach desired weights. Harvest volumes were down 4.4 percent compared with the previous year as a result.

Also due to climatic conditions, deepwater wild catch volumes were down 2 percent while inshore landings were down nearly 9 percent.

Kuntzsch said just about all Sanford’s wild caught fish had been frozen five years ago but now almost 10 percent of the company’s production is sold fresh.

“It’s incredible how much more we’re able to sell in New Zealand these days” – domestic sales have gone from 7 percent of volume five years ago to about 40 percent - some of that is re-exported by New Zealand customers.

Sanford is both investing in branding and innovation and replacing third-party distributors internationally with direct-to-customer sales, particularly to high-end restaurants.

“We don’t have enough seafood anyway, so let’s us try to sell it for as high a price as possible."

Highlighting the pristine waters in which its Big Glory Bay fish is farmed in marketing is part of that strategy. “People associate fish with where it comes from.”

So much of Sanford’s production used to be sold as bait fish or in overseas markets “for next-to-nothing” and the company still has enormous scope to make further improvements by moving up the value chain, said Kuntzsch.

For example, Sanford will launch a nutraceuticals brand, Sea to Me, later this month to create a platform for more differentiation and improved returns from its mussel powder, which "has recognised anti-inflammatory properties and is used to support human and animal mobility.”

It has added a second dryer to double capacity at its Enzaq plant in Blenheim which produces and exports mussel powder.

It will also launch a revamped Auckland Fish Market with 10 eateries and an upscale fish monger aimed at encouraging consumers to try more and varied species.

“Most Kiwis don’t realise we’re a country with so many fish species,” Kuntzsch said. While Norway has about 10 species, New Zealand has 120 to 130.

While Sanford has clearly been undergoing a transformation since Kuntzsch took over the top job in December 2013, he paid tribute to his predecessor, Eric Barratt, saying he was responsible for creating the company’s huge diversity from seafood farming to wildcatch operations and a platform on which to build.

But the people at Sanford are no longer “grumpy fishermen,” he said.

Sanford will pay a 14 cent final dividend imputed to 5.44 cents per share, taking the annual payout to 23 cents, unchanged from the previous year.

Sanford shares haven’t traded yet after closing yesterday at $7.35. They have fallen 11.5 percent year-to-date.



© Scoop Media

Business Headlines | Sci-Tech Headlines


TradeMe: Property Prices In Every Region Hit New High For The Very First Time

Property prices experienced their hottest month on record in December, with record highs in every region, according to the latest Trade Me Property Price Index.\ Trade Me Property spokesperson Logan Mudge said the property market ended the year with ... More>>

Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>


Real Estate: Auckland’s Rental Market Ends Year Near $600 Per Week Mark

The average weekly rent in Auckland reached a new high of $595 at the end of 2020, just shy of a long-anticipated $600 per week. More>>

University of Auckland: Pest-Free Goal Won’t Be Achieved Without New And Better Tools

New Zealand’s goal to become predator free by 2050 will remain an unrealised dream unless new technologies and advances in social engagement continue to be developed, researchers who first promoted it say. A team from the University of Auckland has ... More>>

OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>