HALFYR: SAN: Interim Results Announcement
REL: 0830 HRS Sanford Limited (NS)
HALFYR: SAN: Interim Results Announcement
19 May 2022
Name of Listed Issuer: SANFORD LIMITED (SAN)
INTERIM FINANCIAL RESULTS for the 6 months ended 31 March 2022
Sanford Interim Results Boosted by International Post-Covid Recovery
Sanford Limited (NZX: SAN) has reported a solid recovery in the first half of
its 2022 financial year, with Adjusted (underlying) Earnings Before Interest
and Tax (Adjusted EBIT) of $19.2 million for the six months to 31 March.
This represents a 79.4% increase on Adjusted EBIT from the same period last
year ($10.7 million). Total revenue was $270.9 million for the period, a
16.0% increase on the same period in 2021 ($233.5 million).
Statutory net profit after tax (NPAT) for the period was $6.1 million, 55.5%
behind last year's interim result of $13.8 million which included a one-off
gain of $13.4 million from the sale of non-core property.
Sanford is New Zealand's largest and oldest seafood company and has a diverse
range of interests across fishing and aquaculture.
Key highlights from the first half of the 2022 financial year include:
o The profit contribution from Sanford's wildcatch division is up 108.4%
versus the prior comparable period, driven by a significant lift in global
demand for whitefish
o Maintenance of salmon profitability through increasing revenues by 35.9% to
compensate for additional cost in feed, freight and some increased investment
to minimise a minor increase in mortality due to warmer water temperatures
o Sanford's balance sheet is strong, with net debt at $175.6 million and
around $90 million in headroom with current banking facilities
o Significantly improved operating cashflows of $35.8 million versus $4.5
million for the same period last year
CEO Peter Reidie says the result is pleasing, although challenges continue on
the domestic front.
"The uplift in EBIT and revenue is satisfying and we are pleased we have been
in a good position to take advantage of the post-Covid recovery in many of
our international markets. Now the challenges we face have shifted from
demand to supply, with Covid-19 continuing to make its presence felt in New
Zealand. This is impacting our operations, particularly in processing where
reduced staff availability has impacted productivity and increased costs.
"The good news is that our plans to minimise the impact on fishing, farming
and production are paying off. We have a 100% vaccinated workforce and we
are using Rapid Antigen Testing at the majority of sites, including before
entry to our vessels."
Wildcatch Performs Strongly
Sanford's wildcatch division has performed well and demand is strong in this
seafood category. Sales volumes however have been depressed by supply
availability, with the squid season starting somewhat later than usual.
Improved margins for species such as hoki, scampi and toothfish have driven a
lift in profitability for this division.
Looking forward, Sanford anticipates continuing, short term Covid-19 impacts
on crewing and processing which it is managing thorough testing, staff
attentiveness and policies and procedures.
Mussels Stable, Labour Shortage Impacts Processing
Sanford's mussel division is seeing strong signs of demand recovery and its
profit contribution was stable compared to the first half of 2021, but
improvement is hampered by a processing bottleneck caused by domestic labour
Mr Reidie says "we face serious production constraints in both our Havelock
processing facility and in our joint venture operations with North Island
Mussels Limited in Tauranga, despite sustained attempts to recruit more
workers to these areas. There simply aren't enough work-ready New Zealanders
available to fill all the positions we have."
Salmon Solid, Risks Well Managed
The profit contribution from salmon was flat versus the prior comparable
period, but revenue was up 35.9% with strong demand internationally.
CEO Peter Reidie says "we are fortunate to farm our prized salmon in Stewart
Island waters, where risks from warmer temperatures are reduced and are also
being well managed by our farming team. Reduced stocking densities alongside
aeration and oxygenation technologies have shown their value during the last
six months, keeping seasonal mortalities across all fish at 3.5% from January
People, Supply Chain and Outlook
Sanford has recorded stable personnel engagement rates in its recent survey
of 7.5/10, which Mr Reidie describes as pleasing. "Our people have had to
work very hard over the last two years, responding to the Covid pandemic and
we are pleased they are generally in good spirits, despite the challenges."
The company reports few current concerns about supply chain impacts, thanks
in large part to its relationship with supply chain collaboration group
Mr Reidie says "our overall outlook is positive as we expect strong demand
improvements to continue. The limiting factors for us now are working our
way through the domestic impacts of Covid-19 and addressing staff shortages
in key areas such as mussel processing."
Given the early stage of its recovery, Sanford's Board has determined it will
not be paying an interim dividend. It remains focused on returning to
normalised dividend payments as soon as it is financially prudent to do so.
The Board is committed to taking a step towards this with a modest final
dividend payment at the end of this financial year.
For more information or to arrange interviews or request imagery or video,
GM Corporate Communications, Sanford
+64 (0)21 513 522
End CA:00392297 For:SAN Type:HALFYR Time:2022-05-19 08:30:53
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