Clearwater Seafoods in Halifax, Nova Scotia, Canada have reported a growth in profits on a slight dip in sales.
The company’s second quarter filing shows adjusted earnings before interest, tax, depreciation and amortization (EBITDA) grew 10.7 percent to CAD 30.5 million (USD 23.3 million, EUR 20.3 million). Sales for the period were CAD 148.1 million (USD 113.2 million, EUR 99 million), a four percent dip from CAD 154.3 million (USD 117.9 million, EUR 103.2 million) in the same period of 2017.
The EBITA for the first six months of their fiscal and calendar year rose 4.9 percent to CAD 49.6 million (USD 37.9 million, EUR 33.2 million). Year-over-year sales saw a 5.1 percent dip from CAD 282.7 million (USD 216 million, EUR 189 million) in 2017 to CAD 268.2 million (USD 205 million, EUR 179.4 million) in 2018.
The company says strong cash generation, which increased by CAD 43.8 million (USD 33.4 million, EUR 29.3 million) for the two quarters, reduced working capital requirements and capital expenditures.
Clearwater’s press release credits its sales mix plus lower administrative and selling costs resulting from a fourth quarter restructuring for the improved profit performance. Adjusted EDITDA for the first two quarters of 2018 were 20.6 percent compared to 17.8 percent in 2017. Second quarter earnings were 18.5 percent in 2018 vs 16.7 percent for 2017.
FAS shrimp landings were significantly higher in 2018, and improved distribution channels in China increased clam sales. Clearwater’s loss of 25 percent of an Arctic surf clam quota due to government reorganization of the fishery is not a factor in these figures. The company remains optimistic that improved distribution channels in China will mitigate the impact of the Government action.
Scallops sales were impacted by both lower domestic supply and increased supply and competition from U.S. scallops.
Favorable foreign exchange rates against the lower Canadian dollar contributed a further CAD 1.6 million (USD 1.2 million, EUR 1 million) to revenue.
The company has declared CAD 0.05 (USD 0.04, EUR 0.03) dividend payable 4 September, 2018. This is the same dividend paid in September 2017.
The company notes that their business pattern has lower sales and higher capital costs in the first half of the year, followed by higher sales and lower investments in the second half.
Having completed its fleet renewal in 2017, Clearwater said it has lower capital expenditures that, coupled with inventory reductions to historic levels, are expected to increase free cash flow resulting in lower debt and leverage. These, combined with the seasonal sales patterns should contribute to “modestly higher” third-quarter results.
