CNFC Overseas Fishery Co., Ltd., the listed arm of China National Fisheries Co., has pledged to increase its acquisitions of overseas fishing companies to reboot the firm’s fortunes after profits nosedived in 2014. Revenue came to CNY 378.7 million (USD60.5; EUR 56.7 million), up 27.9 percent year on year. But profits fell 64 percent to CNY 20.09 million (USD3.21 million; EUR 3.01 million) with the state-controlled giant blaming a 14 percent fall in prices for its fish in 2014 for the slump in profit.
The company blamed weak demand in Europe and a 25 percent slump in squid prices due to abundant stocks. CNFC also blamed a 41 percent fall in earnings from its boat business — caused by damage to the company’s Dalian Nan Cheng Fishing Vessel Repair Co facility — now the subject of a law suit. CNFC also pointed to difficulties in finding crews in China.
In its annual report CNFC claims it landed 11,259 metric tons (MT) of Argentine squid in 2014, up a massive 231 percent year-on-year. The firm’s tuna catch totaled 26,635 MT, up 16 percent on 2013. But the saury catch was down 5.7 percent on the previous year at 3,088 MT. CNFC claims its Peru catches fell by almost 80 percent, to 454 MT.
The company’s plans to boost profits in 2015 include better management of its fleet to avoid oversupply of fish pulling down prices. It aims to capitalize on two new squid vessels that recently got licenses to fish Argentina’s exclusive economic zone.
Likewise, the firm will “optimize” its tuna and saury fishing fleet by bringing two new vessels into operation while retiring two older vessels: The CNFC fleet will total 47 vessels by the end of 2015.
To cut its payroll, CNFC wants to hire lower-cost international labor — an indication of how high Chinese wages have gone compared to average pay in countries like Bangladesh, Pakistan and Cambodia, all of them sources for crew hired by CNFC.
The firm’s subsidiaries in Zhoushan and North America will both aim to launch their own product lines, promised CNFC chairman Xianfeng Wu, in the company annual report. “Other branches of the company are rapidly gaining marketing experience in aquatic products,” according Wu.
The company promises to seek out acquisition opportunities abroad. It should be seen as significant in light of a CNY 659 million (USD 105.40 million; EUR 98.85 million) investment from private Shanghai-based conglomerate keen on overseas deals. While the investment from Fosun suggests confidence in CNFC among the local investment community it also suggests CNFC could draw on the overseas investing insights and know-how of Fosun, which has vigorously sought out deals abroad.
CNFC recently took a 55 percent stake in Xiamen Xin Yang Zhou Aquatic Products Co., a processor, for CNY 154 (USD 24.64 million; EUR 23.1 million).
Competitors have criticized CNFC’s access to government subsidies in the form of fuel subsidies as unfair competition, allowing the firm to catch tuna in locations and conditions that are unfeasible for private, commercial firms.
The company’s annual report bold states that “after reorganization the company will be China’s flagship long-distance fishing company.”
