Announcement
FLLYR: SAN: Annual Results Announcement
08:30am
SAN
14/11/2019 08:30
FLLYR
PRICE SENSITIVE
REL: 0830 HRS Sanford Limited (NS)
FLLYR: SAN: Annual Results Announcement
14 November 2019
Name of Listed Issuer: SANFORD LIMITED (SAN)
FINANCIAL RESULTS for the year ended 30 September 2019
Sanford Reports Higher Returns from Lower Sales Volumes in Full Year Results
2019, Supporting Value Add Strategy and Innovation Commitment
2019 vs 2018
Catch / Harvest Volumes (000 GW tonne) 113 -4%
Sales Volumes (000 GW tonne) 115 -5%
$m
Revenue 545 +6%
Gross Profit 107 -6%
Like for Like Revenue* 558 +8%
Like for Like Gross Profit* 120 +6%
Like for Like Gross Profit %* 21.5% -0.6%
Adjusted EBIT 64.8 0%
Net Profit After Tax 41.7 -1%
Earnings per Share 44.6 cents
Dividend per Share 23 cents
Final Dividend paid 6th December 14 cents
*Like for like views revenue (and gross profit) comparable to 2018 without
implementing the new revenue accounting standard (NZ IFRS 15)
New Zealand's largest seafood company Sanford Limited (NZX: SAN) has reported
Net Profit After Tax (NPAT) for the financial year ending September 30, 2019
of $41.7m, compared to its 2018 result of $42.3m. Sanford's underlying
Adjusted Earnings before Interest and Tax (EBIT) are $64.8m, compared to
$64.7 million in 2018. Sales revenue however, increased to $558m on a
like-for-like basis*, up 8% from $515 million in the prior year, despite
sales volume decreasing by 5% to 115,000 tonnes.
CEO Volker Kuntzsch says that while the result did not meet original
expectations, it was a good outcome following a difficult year and certainly
confirms that Sanford has adopted the right strategy for challenging times.
"Climate change is the number one risk we face as a business. We see the
consequences of warmer waters and adverse weather conditions playing out in
the oceans and on our bottom line. In this situation, it is important for
Sanford to be doing the right thing on the water to ensure we fish
sustainably, and also to be vigilant and agile so that we are best placed to
manage these changes. Our strategy to mitigate this risk through investing in
innovation across the business and bringing our customer focus to life at the
same time is clearly bearing fruit. Achieving significant top line growth
with reduced volumes strongly aligns with our strategic direction."
Among the challenges faced by Sanford in 2019 year was the sad loss of crew
member Steffan Stewart in a tragic accident on the deepwater vessel, the San
Granit. Sanford removed the vessel from operations for three months to
complete a further and even more highly detailed risk analysis of all factory
equipment and processes, despite having already had extensive adjustments
made to the vessel to align it to regulatory safety standards prior to its
addition to Sanford's fleet.
Mr Kuntzsch says safety is a top priority for Sanford.
"With safety such a major area of focus for us, we were pleased that our
latest engagement survey shows a very high awareness of the focus on safety
and health across the business, with the outcome of 85%, the highest score of
the entire survey, well above the international benchmark. We will not
compromise on safety and we are glad our people see that and are actively
taking part in the safety conversation within the business."
The three-month tie-up of the San Granit meant a reduction in catch volumes
as did the decision by Sanford to support an industry initiative to
voluntarily forgo 20,000 tonnes of hoki quota on the West Coast as a
precautionary sustainability measure. These volume reductions could only
partially be compensated for through higher catches of species like squid and
product mix improvements on board the deepwater fleet. The Precision Seafood
Harvesting (PSH) fishing method has been approved by the Ministry for Primary
Industries (MPI) for use in inshore and in deepwater fishing and has since
been deployed across Sanford's fleet. This New Zealand-developed fishing gear
is a game changer in world fisheries, delivering a superior quality of
product through its gentler method.
Mr Kuntzsch says "PSH is creating a strong level of interest globally. Our
fishing crews and our customers are enjoying the improvement in quality and
customers are already telling us they want 'fish caught the PSH way'."
In the face of algal blooms limiting harvests in the Marlborough Sounds,
Sanford's mussel business posted an encouraging result on the back of
stronger volumes, sales channel focus and product diversification. The mussel
powder operation was boosted with the launch of the Sea To Me nutraceutical
brand. The company has confirmed its intention to make a substantial
investment in a marine extracts facility in Blenheim in 2020.
Sanford's salmon division delivered a very good result, due to stronger
volumes and value realisation. This was partly driven through its Big Glory
Bay brand which is now on offer on menus in high end restaurants in New
Zealand and the US. Sanford has been granted a consent variation for its
Stewart Island salmon farm which will allow it to farm up to 30% more fish
over the next three years. The salmon business was challenged by an algal
bloom causing higher mortalities and a management plan is now in place to
deal with climate change related risks in Big Glory Bay.
Sanford Chief Financial Officer Katherine Turner says despite reporting flat
year-on-year EBIT, 2019 has been very successful in achieving other key
milestones.
"We have laid the foundation for further value creation by realising a number
of operational projects, for example the sale of our pelagic business in
Tauranga and the footprint optimisation in Southland. Furthermore, the
innovation and value strategies are proving themselves, and we are now
focusing on investing into our scampi fleet and the marine extracts facility.
The opening of the refurbished Auckland Fish Market in the city's rapidly
growing Wynyard Quarter earlier this year went really well and highlights our
increasing focus on consumers. It includes our Sanford and Sons Fishmonger
where we showcase our wonderful seafood to the public."
Another key measure necessary to ensure successful implementation of the
company's strategy is people engagement. Ms Turner says higher engagement
survey results from staff and sharefishers provided one of the most
satisfying numbers for the leadership team.
"We saw a lift in our people engagement in 2019 with an overall engagement
score of 72% which was a significant improvement on 2018. Of the many numbers
we report, this is one of the most satisfying, along with the staff
endorsement on health and safety already mentioned."
Volker Kuntzsch agrees.
"Having our people focused on our strategy, embracing our values of care,
passion and integrity and the principle of achieving together, this is also
for me a very satisfying aspect of 2019. With that level of engagement from
our people, we are now well placed to make 2020 a year of further successes.
As our heightened level of investment into asset rejuvenation and innovation
continues over the next three years, we will be creating greater value for
every kilogram of seafood we harvest. Along the way, we will need to tackle
the challenges of climate change and ensure we stay abreast of rapidly
changing customer and consumer expectations. We want our people to feel
increasingly engaged in this journey and together we are feeling positive
about what we can do in 2020."
For more information or to arrange interviews, please contact:
Fiona MacMillan
GM Corporate Communications, Sanford
fmacmillan@sanford.co.nz
+64 (0)21 513 522
For investor relations queries, please contact:
Katherine Turner
Chief Financial Officer
kturner@sanford.co.nz
+64 (0)21 470 436
End CA:00344244 For:SAN Type:FLLYR Time:2019-11-14 08:30:38
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