Celebrating 25 Years of Scoop
Special: Up To 25% Off Scoop Pro Learn More

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

 

Sanford enters conditional deal to sell fishing business

Sanford enters conditional deal to sell Tauranga-based fishing business


By Rebecca Howard

Nov. 19 (BusinessDesk) - New Zealand seafood company Sanford is opting to reduce its quota holding to focus on value as it enters a conditional deal to sell its Tauranga-based fishing business to local company Pelco NZ.

No price was disclosed but the deal includes three purse seine vessels, some processing equipment and a portion of its pelagic quota holding, mainly in Fishing Management Area 1, which represents 3.75 percent of Sanford’s quota asset value or around $15 million dollars based on its quota book value of $401.5 million as of Sept. 30.

In volume terms, the quota sale reduces Sanford’s overall quota holding under New Zealand’s Quota Management System to approximately 19 percent from around 22 percent available for the commercial catch.

Sanford CEO Volker Kuntzsch says the potential sale is a logical fit with Sanford’s strategy of focusing on value.

"Strategically, we are concentrating on areas that lend themselves to consumer-centric innovation and branding, while Pelco will benefit from economies of scale. We believe that if this deal goes ahead, it will create more value for both companies and New Zealand as a whole. It then frees up capital to allow us to invest in areas that are a stronger strategic fit," he said.

Last week, the company said its annual earnings fell short of its expectations due to “challenging” climatic conditions leading to a decline in harvest volumes. However, 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.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

First NZ Capital said the company's shift away from a hunter-and-gatherer mind-set to an approach that focuses on improving and sustaining returns through better brand management and optimising the use of its existing aquaculture products and quota-based wild catch has the potential to double the company’s earnings before interest and taxation over time.

However, it dropped its 12-month target price by 11 percent to $7.39 as performance in the wild catch segment continues to disappoint and as the "opaque nature of performance" with third-party volumes not disclosed "makes it difficult to understand key drivers."

FNZC has a neutral rating on Sanford.

The stock recently traded down 1.9 percent at $7.06 and has fallen 13.2 percent this year.

Fishing Management Area 1 covers the inshore waters and harbours along the north-eastern coast of the North Island from North Cape to Cape Runaway. It includes the eastern coast of Northland, the Hauraki Gulf, the Coromandel and the Bay of Plenty. The main species in the region is snapper, according to Fisheries New Zealand.

(BusinessDesk)

ends

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.