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Sea Harvest posts resilient interims

Sea Harvest says it faced headwinds in the form of a firmer rand, a 5 percent reduction in the total allowable catch, additional Covid-19-related costs and operating pressures in the aquaculture segment. Photo: Supplied

Sea Harvest says it faced headwinds in the form of a firmer rand, a 5 percent reduction in the total allowable catch, additional Covid-19-related costs and operating pressures in the aquaculture segment. Photo: Supplied

Published Aug 31, 2021

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SEA HARVEST posted a 5 percent growth in revenue during the half-year to the end of June to R2.1 billion, up from R2bn a year earlier, on the back of strong performances from the South African fishing segment, the Cape Harvest Foods segment and its Australian operations.

Group chief executive Felix Ratheb said the performance was commendable considering the company faced headwinds in the form of a firmer rand, a 5 percent reduction in the total allowable catch (TAC), additional Covid-19-related costs and operating pressures in the aquaculture segment.

“However, we benefited from good fishing conditions, firm export and local retail markets, and a sound hedging strategy, delivering operating profit of R323 million for the period, 26 percent higher than the prior period, with the operating profit margin expanding to 15 percent,” said Ratheb.

Headline earnings jumped to R202m, 19 percent ahead of 2020, while earnings per share increased 27 percent to 77.7 cents per share. No dividend was declared for the period.

The South African fishing segment was resilient and generated R1.32bn in revenue on the back of increased vessel availability, strong catches, firm export markets and good retail trade, despite the 5 percent reduction in TAC in early 2021 and a 5 percent strengthening in the rand.

Europe remains the group’s largest export market, with export revenue up by 3 percent on the back of firm retail and the recovering food service market.

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The group said the combined export mix was stable at 53 percent of total revenue and taking into account the strengthening of the rand against the euro.

Local revenue through the retail channel was up by 4 percent, with the flattening of in-home consumption because of the strict lockdown.

Revenue in the local food service channel was flat because of the various levels of the lockdown, while the local wholesale channel has seen good recovery, increasing revenue by 41 percent.

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Cape Harvest Foods generated R516m in revenue, up 10 percent from R470m a year earlier, driven by higher volumes and firm pricing.

Sea Harvest Australia’s revenue was up 2 percent to R231m.

Revenue in the aquaculture segment more than doubled to R36m, up from R15m a year earlier. However, the group said this increase in revenue was insufficient to turn around the segment. It said the aquaculture segment generated an operating loss of R37m, up from R39m in 2020, and accounted for R2m of fair value gains on the revaluation of biological assets during the period compared with R12m in 2020.

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“The curtailment of air freight and associated inflated freight costs from South Africa, together with the continued lockdown restrictions and slow pace of roll-out of C-19 vaccines in the Far East, continue to severely impact the aquaculture segment. Likewise, the oyster and mussel operations, which supply almost exclusively into food service, continue to be severely affected by Covid-19,” said the group.

Sea Harvest has, through its subsidiary Ladismith Cheese, acquired 100 percent of the issued capital of Mooivallei Suiwel, a producer and supplier of dairy products in the Western Cape. Its main products of cheese and butter were sold into retail and non-retail channels in South Africa.

“The Mooivallei acquisition complements Ladismith Cheese through 40 percent additional cheese production capacity, raw material supply, access to industry skills and expertise, a strong asset base and additional working capital,’’ said Sea Harvest.

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