Hit hard by COVID-19 related lockdowns, Sanford Limited's profit dropped by almost half, according to a recent financial report, but the company remains optimistic of a recovery in 2021.
The New Zealand-based company said in its latest financial report that reported net profit after tax (NPAT) for the year up to 30 September was NZD 22.4 million (USD 15.44 million, EUR 13 million) compared to NZD 41.7 million, (USD 29 million, EUR 24.3 million) for the previous year, a 46 percent decrease. The company also reported adjusted earnings before interest and tax (EBIT) for the year was NZD 38.3 million (USD 25.3 million, EUR 22.3 million) compared to NZD 64.8 million (USD 44.6 million, EUR 37.7 million) for the prior year, representing a 41 percent decrease.
Acting CEO Andre Gargiulo, in a statement, said that the results are disappointing, especially while the entire company is forced to work extra hard through a very challenging COVID-19 environment.
“We acknowledge this is a disappointing result, both for our investors and for our people, who have worked incredibly hard through the extra challenges brought on by the pandemic,” he said.
Despite the results, Gargiulo said he remains optimistic of the future, and that the company has devised strategies to respond to future challenges.
“We are confident that our strategy to get closer to our consumers and maximize the value of our products is the right one that will see us recover from the immediate impact of COVID-19. For example, salmon volumes into North American markets have returned to near pre-Covid levels as we are adding new retail customers,” Gargiulo said. “We have developed and are putting in place a plan to more flexibly respond to changing environments, while protecting profits through an appropriate cost structure. Sometime this means we will have to make hard choices.”
He added that are falling salmon prices and difficulty in maintaining supply in the food service channels marred by lockdowns are both challenges the company will continue to face.
The company’s earnings report indicates that North American sales have suffered, translating into a fall of 30 percent compared to last year. The company also said it had poor catches of Patagonian toothfish, noting that the fish is a high value product. CFO Katherine Turner added that the company harvested more fish and shellfish than last year, but because of COVID-19, more stock than usual has gone to inventory.
“The pandemic’s impact on food service also meant that high value products were less in demand reducing our margins further and increasing our cost base,” Turner said.
The company's seafood inventory is at NZD 74.8 million (USD 51.6 million, EUR 43.5 million) from NZD 37.6 million (USD 25.9 million, EUR 21.9 million), largely because of increased volumes of mussels, salmons and hoki.
Gargiulo said that Sanford is seeing early signs of recovery in its markets.
“Our teams on the water and in our processing plants have worked hard. We also experienced no material setbacks from algal blooms on our mussel or salmon farms,” he said. “We now have an opportunity to take advantage of strong inventories of our premium products which have built-up over recent months.”
Photo courtesy of Sanford Limited
