Shandong Zhonglu Oceanic Fisheries Co. recently issued disappointing results for 2019.
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 at CNY 82.3 million (USD 11.5 million, EUR 10.6 million). This is a far cry from the 74.4 percent year-on-year increase recorded in 2017 and has prompted investors to ask whether distant-water fishing is profitable.
“Does this mean ocean fishing is now harder to do?” wrote one investor on the ‘Stock Market Investor’ chat forum on microblog platform Weibo. Another questioned the long-term outlook for the company’s subsidy payments.
Like most other distant-water fishing firms in China, Zhonglu’s finances are buttressed by subsidies. The firm booked a CNY 18.23 million (USD 2.5 million, EUR 2.36 million) national government subsidy for the first nine months of 2019, according to company documents which don’t detail what exactly the pay-out was for. Additionally, Shandong Zhonglu received CNY 20.5 million (USD 2.9 million, EUR 2.7 million) in subsidies from the Qingdao local government in the first half of 2019. The firm, which recorded revenues of CNY 515.4 million (USD 72.1 million, EUR 67 million) in the first half of 2019, up 17 percent year-on-year, didn’t detail what the funds were used for, but other large fishery firms have received subsidies for modernizing their vessels and port handling facilities.
A regular presence at international seafood fairs, Zhonglu sells to Chinese, European, and U.S. buyers. Ghana-based Zhonglu subsidiary Yaw Addo Fisheries Co is one of several China’s fishing firms in the West African state that have drawn attention from environmental non-governmental organizations for their scale and competition with local small-scale vessels.
