Pingtan Marine Q1 results shows surge in catch volume, fall in prices
A comparative drop in input costs like fuel as well as a large increase in catch volume has powered earnings at Pingtan Marine, a leading Chinese distant-water fishing firm.
Revenue at Fuzhou, Fujian Province, China-based Pingtan Marine dropped in the first quarter to USD 17.3 million (EUR 15.9 million), down 6.1 percent year-on-year compared to last year. Yet sales volume increased by 54.9 percent year-on-year to 13.5 million kilograms in the first quarter of 2020. While the company faced weaker demand from the catering sector and from international buyers, resulting in lower prices, Pingtan Marine Chairman and CEO Xinrong Zhuo said he expects “consumption of seafood will gradually return to normal levels” by the end of the year.
“The decrease in revenue was primarily attributable to the different sales mix, impact of market situation, and the 39.3 percent decrease in average unit sale price,” the company noted in its statement to investors.
The company, which is publicly listed on the NASDAQ Stock Exchange, recorded a net income of USD 8.42 million (EUR 7.74 million) in Q1, compared to a net loss of USD 1.97 million (EUR 1.76 million) in the same period last year. Gross profit increased by 41 percent to USD 5.8 million (EUR 5.3 million), up from USD 4.1 million (EUR 3.77 million) in Q1 2019.
An increase in the company's gross margin to 33.2 percent for the three months (compared to 22.1 percent in the same period in 2019) was primarily attributable to a drop of unit production cost by 48 percent for the first quarter of 2020. Fuel costs were high in the first quarter of 2019 for Pingtan because it launched a series of new trawlers, which then required several months to get to the remote waters where they’ve since been operating. Sixty-nine of Pingtan’s 142 vessels operate in international waters, with 12 in the Bay of Bengal in India and 37 in the Arafura Sea in Indonesia. Separately, 11 of its vessels are currently being refurbished. Pingtan Marine has also had 13 fishing boats operating in East Timorese waters.
Pingtan has in the past stated its ambitions to build an “industry chain” with fishing as well as processing and distribution operations across China – and its own seafood brands. Yet, thus far, the firm appears to be focused on processing clients and international buyers.
Pingtan Marine is controlled by a brother of the principal shareholder in another distant-water fishing firm, Fuzhou Hong Long Distance Fishing Co., according to Chinese business magazine Caixin, which has followed the firms. Hong Long came to public prominence in 2018 when its license was suspended by the Chinese government after Ecuador accused one of its vessels of fishing for sharks in the area of the Galapagos Islands.
In a 2017 interview with a state-run news site company, Hong Long chief financial officer Yu Yang was fulsome in his praise for the “support and subsidies” from government to Chinese trawlers operating in international waters, as well as the shipbuilding industry, as a means to ensure China’s food security, Yu said.
Photo courtesy of Pingtan Marine