Auckland, New Zealand-based Sanford Limited’s latest market update indicates that COVID-19 has continued to impact the business, as increased shipping costs and lower market demand continue to take a toll.
The company’s newest update, issued on 31 August, indicates that increased supply chain costs, coupled with delays shipping frozen seafood products to key markets, have hurt the company. Supply chain costs, Sanford said, were up by NZD 5 million (USD 3.55 million, EUR 3 million) over the prior corresponding period, an increase of 17 percent on a cost-per-ton basis.
“As a heavily export focused business, we were hit early by the impact of COVID-19 globally on foodservice and supply chains,” Sanford CEO Peter Reidie said. “We are now seeing different parts of our business begin to recover from that at different speeds.”
The company’s wild-catch segment provided the largest portion of the company’s revenue, making up 57 percent of its year-to-date revenue. Catch volumes were “generally consistent” with the prior period, and the segment’s revenue was 2 percent ahead of the same period in 2020, but remains “well below pre-COVID levels.”
Salmon, the company said, saw some recovery, with revenues increasing for fresh salmon sales – typically sold in the U.S., Asia, and Australia via air freight. Despite increased revenue, the company said the margins are in line with the prior period due to “the need to clear inventory that was frozen due to COVID demand impacts in 2020.”
The company’s mussel segment, which provided 19 percent of the company’s year-to-date revenue, saw significant downturns. The segment’s revenue was down by 21 percent compared to the prior year due to weaker pricing, that the company attributes to the impact that COVID-19 has had on international demand.
Soon after the company’s financial reports, Sanford announced that Ngāi Tahu Investments purchased a significant minority shareholding in the company at a price of NZD 5.50 (USD 3.90, EUR 3.29) per share – a 23.6 percent premium on the closing price on 31 August.
“This is a very positive development,” Sanford Board Chair Robert McLeod said. “Ngāi Tahu is one of New Zealand’s largest and most successful iwi investors, with a substantial stake in and knowledge of the seafood sector. This offer recognizes the potential long-term performance and quality of Sanford’s assets.”
Overall, Reidie said the company has a robust balance sheet and an operating cashflow consistent with its expectations.
“Sanford continues to have good support from our lenders,” he said. “Our debt levels remain similar to our half-year position and we have sufficient debt headroom.”
Photo courtesy of Sanford Limited
