Lunenberg, Nova Scotia, Canada-based High Liner Foods posted positive financial results for the second quarter of 2021, following up a difficult Q1 marked by sales and profit declines.
The company’s sales volume increased compared to Q2 2020 by 1.1 million pounds, or 2.2 percent, to 50.4 million pounds for the 13 weeks ended 3 July 2021. Coupled with the volume increase was a sales increase compared to Q2 2020 of 14.5 percent, or USD 24 million (EUR 20.5 million), to USD 189.9 million (EUR 162.3 million) compared to USD 164.8 million (EUR 140.8 million).
The company’s gross profit as a percentage of sales increased compared to Q2 2020 to 23.4 percent, and gross profit increased by USD 7.6 million (EUR 6.4 million), or 21 percent, to USD 44.4 million (EUR 37.9 million). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) as a percentage of sales “remained consistent” at 10.3 percent, while adjusted EBIDTA increased by 13.5 percent to USD 19.6 million (EUR 16.7 million).
The positive numbers come on the heels of a Q1 marked by reduced sales compared to 2020, which the company attributed to the surge in demand caused by the COVID-19 pandemic in Q1 2020.
"We continue to be pleased with the performance and resilience of our business. This quarter, compared to the same period last year, we saw growth in sales, gross profit, adjusted EBITDA and net income, reflecting our ongoing progress in executing on our strategy of branded value-added growth," High Liner Foods President and CEO Rod Hepponstall said. "On a two-year CAGR basis, we saw our gross profit increase by 1.7 percent and our adjusted EBITDA increase by 4.6 percent, when compared to the second quarter of 2019."
The company attributed the increase in sales over last year to the recovering foodservice business, which it cited as a main driver behind the company’s Q1 struggles. The company’s Q1 2021 numbers also had to go up against record-setting retail sales caused by the COVID-19 pandemic – a pace of buying which has since abated.
That comparison to pandemic-level retail buying still impacted the company’s numbers in Q2 2021, High Liner said.
"Sales volume was lower compared to the same period last year due to the significant surge in demand at the onset of the COVID-19 pandemic a year ago,” the company said.
Supply chain issues, the company added, continue to impact its bottom line.
“Sales volume in the second quarter was also negatively impacted by the global supply challenges that have resulted in shipping container shortages and reduced raw material supply,” High Liner said. “Sales volume was favorably impacted by new business and new product sales.”
Hepponstall said the company is still aiming to post positive adjusted EBITDA growth this year.
“Like others in the retail and foodservice space, the company continues to navigate significant headwinds related to the previously disclosed global supply challenges and ongoing uncertainty related to the COVID-19 pandemic,” he said. “High Liner Foods is taking all available steps to mitigate the impact to the business by drawing on the scale of its global supply chain and the diversification of species, product, procurement, and strong customer and supplier relationships to support its position.”
Hepponstall said the company has no impending debt maturities and will continue to invest in 2021.
“With a strong balance sheet and cash flow, the company is well-equipped to invest in the business, with anticipated capital expenditures of approximately USD 22.0 million [EUR 18.8 million] in fiscal [year] 2021, an increase over the average capital investment in the business over the past three years,” he said.
Photo courtesy of High Liner Foods
