CNFC’s 2019 financial results reveal the growing spread in profitability between distant-water fishing and processing operations in China.
CNFC Overseas Fishery Co Ltd, the listed arm of China National Fisheries Co, saw revenues fall 7.6 percent last year to CNY 580 million (USD 81.2 million EUR 65 million) and its net profits drop 60.7 percent to CNY 22.4 million (USD 3.13 million, EUR 2.91 million). The company’s gross profit margin, at 4 percent, was down 1.9 points on last year’s figure, and at 3.5 percent, its net profit margin was down 5.1 points year-on-year.
The figures are similar to those flagged by CNFC earlier this year, but investors who have looked to the company as a good bet during the coronavirus lockdown in China will nonetheless be disappointed. Driven by government policies to guarantee seafood (and chicken) supplies and a rush by consumers to purchase canned food such as the tinned fish produced by CNFC, investors have chased CNFC shares in recent weeks. On 7 April, the company’s share price exceeded the daily rise limit set by the Shenzen Stock Exchange, hitting CNY 6.83 (USD 0.95, EUR 0.88). But by 14 April, the share price had dropped to CNY 6.33 (USD 0.88, EUR 0.82).
In a January letter to investors, CNFC blamed its performance on weaker prices for tuna and claimed “reduced subsidies for renovations of vessels” was also a key reason for the results, alongside a CNY 200 million (USD 28 million, EUR 26 million) loss reported at Hua Nong Financial Services, an insurance joint venture that the firm has since exited. A CNY 61.3 million (USD 8.6 million, EUR 8 million) subsidy payout from the Chinese government was the main reason why CNFC Overseas Fishery Co was able to book a profit for the first three quarters of 2019.
While the company claims to have a fleet of more than 250 vessels and a multinational processing business, profitability has remained modest at CNFC. Its fishing operations, at CNY 430 million (USD 60.2 million, EUR 55.9 million), represented 75 percent of company revenue but its profit margin of four percent was well ahead of the 2.4 percent profit margin derived from the company’s retail operations. Processing, which now accounts for only 0.05 percent of the firm’s revenue, was loss-making, returning a negative 11 percent margin.
Photo courtesy of Chris Chase/SeafoodSource
