High Liner 2Q income falls 18 percent
High Liner Foods today reported financial results for the second quarter and first half of the year.
The Canada-based company’s sales increased in the second quarter of 2014 14.9 percent compared to the same period in 2013 to USD 235.5 million (EUR 176.3 million), with the acquisition of American Pride adding USD 32.1 million (EUR 24 million) in sales.
Adjusted EBITDA decreased in the second quarter of 2014 by 13.5 percent to USD 16.7 million (EUR 12.5 million). The drop is attributed to lower overall sales and lower product margins in Canada reflecting cost increases not fully recovered through price increases. Income also decreased by 18.5 percent, to USD 7.5 million (EUR 5.6 million).
For the year to date, sales increased by 12.1 percent to USD 538.2 million (EUR 403 million), with the American Pride acquisition contributing USD 73.5 million (EUR 55 million). Adjusted EBITDA increased in the first half of 2014 by 8.1 percent to USD 43.9 million (EUR 33 million).Adjusted income also increased in the first half by 12.1 percent to USD 21.3 million (EUR 16 million).
“Second quarter earnings in 2014 decreased compared to last year largely as a result of lower margins on certain products in our Canadian business,” said CEO Henry Demone. “Raw material costs in our Canadian business have increased in 2014, in part due to a weaker Canadian dollar, and have not been fully recovered through price increases to our customers.
“Unfortunately, many of our major customers operating in the U.S. foodservice industry are continuing to experience soft sales, creating a challenging environment for this part of our business. We are focused on working with our customers to develop innovative seafood products to help drive increased sales.
“We’ve previously disclosed our strategic goals for 2014 are profitable growth, supply chain optimization and succession planning, and we are making progress on initiatives related to achieving these goals. The American Pride integration, which started after Lent, is on track to be completed by the end of this year. We have engaged outside expertise to assist with the supply chain optimization program and USD 20 to USD 25 million (EUR 15 to EUR 18.7 million) in annual cost savings should begin to be realized in 2015, with the full benefit being achieved in 2016. We also continue to believe opportunities exist to further consolidate the frozen seafood industry in North America.
“Certain product margins may continue to be negatively impacted through the remainder of this year as high costs on certain key species continue and sales in the U.S. foodservice sector may remain challenging, particularly as the underlying market dynamics of the U.S. restaurant industry shift for our major U.S. foodservice customers. However, we are committed to product innovation in our sector and are working with existing and new customers to bring innovative offerings to consumers.”