Sea Harvest earnings knocked by fishing quotas, cost pressures and supply chain woes

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Fishing quotas, supply chain disruptions and input costs created a challenging environment for Sea Harvest.
Fishing quotas, supply chain disruptions and input costs created a challenging environment for Sea Harvest.
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  • Sea Harvest's share price nosedived by more than 7% shortly after markets opened on Monday.
  • The fishing group said reduced fishing quotas, cost pressures and supply chain disruptions made for a challenging half-year.
  • Shareholder earnings dropped 10% compared to the same period last year.
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Fishing Group Sea Harvest's earnings have taken a knock following a "challenging" half-year.

The group released its interim results for the six months ended 30 June this year. While the group managed to grow revenue by 29% to R2.7 billion, compared to the same period last year, its earnings took a knock of 10% to 65 cents a share.

The group's share price, which opened at R12.45 on Monday, dropped 7.47% to R11.47 shortly after markets opened. Just before 10:00 it had picked up again to around R12.44.

In a notice to shareholders, Sea Harvest explained that quota losses from the Fishing Rights Allocation Process, significant input cost pressure, and supply chain disruptions contributed to a challenging environment.

Notably, its South African fishing segment faced a 10% decrease in the available hake quota volumes, a significant increase in the price of fuel, and a stronger rand, the notice indicated. Revenue still increased 8% to R1.42 billion – mainly due to "firm export markets" and strong pricing. However, increased selling and distribution expenses linked to local and export freight rates ate into operating profits for the segment, which was down 25% to R236 million.

During the same period, Sea Harvest completed its acquisition of Australian marine company MG Kailis – for R765 billion. Sea Harvest said the acquisition is a "significant step" in its international seafood growth strategy – specifically focusing on high-value seafood species. Revenue from the Australian segment increased 17% to R270 million. "After absorbing R13 million in acquisition-related costs, the segment recorded operating profit of R4 million (down from R5 million previously)."

READ | Sea Harvest inks R785 million agreement to acquire Australian marine company

The group explained that its aquaculture segment's revenue climbed 55% to R56 million due to increased abalone sales volume, firmer pricing and a weaker rand to the US dollar. "The improved performance of the abalone division resulted in the aquaculture segment reducing its operating loss by 51% to R18 million." 

The Cape Harvest Foods segment (which includes Ladismith Cheese) revenue climbed 85% to R956 million. Cape Harvest acquired BM Foods, which makes olive and pickled products and cheesemakers Mooivallei in 2021. The segment's operating profit increased 44% to R55 million.

Sea Harvest's financing costs increased 79% to R52 million – due to higher debt and interest rates.

No interim dividend was declared.

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