Sanford reels in $53m in choppy waters

Fishing firm Sanford has safely navigated unprecedented fuel costs and unfavourable exchange currents to net a 165 per cent increase in annual net profit.

Buoyed by soaring seafood prices and operational efficiencies the company posted $53.4 million net earnings for the year ended September 30 compared to $20 million for the same period last year.

Despite the strong result, Sanford was down 5c at $5.35. The company gave little guidance on the outlook.

Profit was boosted considerably by a $26 million return for the sale of its holding in Canadian company Fishery Products International. Nonetheless, the result pleased managing director Eric Barratt.

"It's pleasing to report that not only was overall profit up but underlying earnings for the business were much stronger despite the high exchange rate for most of the year and unprecedented fuel prices," he said.

"The improvement in profitability resulted from higher market prices for many species and improved operational results from many parts of our business."

Sanford stock has gained more than 35 per cent this year, one of the few companies on the benchmark index to chart strong gains as the domestic economy shrank.

The company benefits from a weaker New Zealand dollar, and the currency has fallen around 20 per cent against the United States dollar in the past three months.

Revenue for the year totalled $436.6 million - up 18.7 per cent on the same period last year.

Market price for hoki and greenshell mussels closed the year 40 per cent up on last year, while skipjack tuna increased 35 per cent. Watering down earnings, however, was a near $10 million jump in fuel costs and a high Kiwi dollar for much of the 12 months.

Sanford will begin a policy of hedging in the 2009 year.

Sanford's expanded mussel-processing plant in Tauranga should be completed in December 2009. An automated mussel opening line in Havelock will also boost capacity, while work is under way to open oysters automatically at its Kaeo processing plant.

Mr Barratt said that customers were under real pressure to shorten inventories in an effort to minimise credit lines and avoid a possible decline in market values.

"There are some markets saying `we want the full benefit of the exchange rate otherwise we cannot do business'."

- © Fairfax NZ News