Shandong Zhonglu Oceanic Fisheries Co. has flagged a big fall in revenues and profit for 2020.
The Chinese distant-water fishing firm recently announced its revenues, at CNY 966 million (USD 144.9 million, EUR 125.6), were down 14.4 percent on the previous year, while its profits fell by 64 percent to CNY 29.5 million (USD 4.4 million, EUR 3.8 million). Zhong Lu is blaming the impact of COVID-19 on hurting demand for its products – primarily squid and tuna – and weighing down prices.
The company’s lower earnings are a repeat of 2019, when it blamed overcapacity in the global tuna sector for weak pricing and poor earnings. In its 2019 financial report, Zhonglu Oceanic singled out a “saturated” Japanese market as the cause of the lower prices it received. The postponement of the Olympic Games in Tokyo last year also dented expected demand, it said.
Zhong Lu’s revenues grew 10.3 percent year-on-year in 2019 at CNY 1.2 billion (USD 168 million, EUR 156 million), but profits attributable to shareholders were down 8.83 percent to CNY 82.3 million (USD 11.5 million, EUR 10.6 million).
Zhonglu claims to be China’s first distant-water operator to launch vessels targeting the Atlantic tuna catches. The firm operates tuna purse-seine vessels from Tema port in Ghana through a subsidiary, Yaw Addo Fisheries Co.
Zhong Lu isn’t the only Chinese distant-water fishing firm struggling through the COVID-19 pandemic. CNFC Overseas Fishery Co Ltd, the listed arm of China National Fisheries Co, has flagged a loss of CNY 154 million (USD 23.1 million, EUR 20 million) in 2020, having projected a loss of between CNY 145 million and CNY 155 million (USD 21.7 million and USD 23.2 million, EUR 18.8 million and EUR 20.1 million) for 2020. The firm, which has come to rely on state subsidies for profitability, blamed the slump on lower prices for its tuna and squid products, as well as lower subsidies from the state.
A potential World Trade Organization deal to end harmful subsidies to fisheries would complicate the financial picture for Zhonglu Oceanic and other Chinese distant-water fishing firms, which rely on fuel and vessel maintenance subsidies for profitability.
Photo courtesy of Shandong Zhonglu Oceanic Fisheries Co.
