Sea Harvest Group resilient in tough macro environment

29 August 2022

CAPE TOWN: Sea Harvest Group’s interim results softened for the first six months of 2022 driven by losses in hake volumes from the recently concluded Fishing Rights Allocation Process (FRAP) and a material increase in the fuel price.

Sea Harvest Group CEO, Felix Ratheb, says Sea Harvest has had a challenging six months to 30 June 2022. “We confronted tough macro-environmental factors driven by significant input cost pressures and supply chain disruptions. The South African Fishing operation, the bedrock of the Group, had to contend with a c.10% decrease in available hake quota volumes due to losses associated with the FRAP and a reduction in the Total Allowed Catch (TAC), compounded by significantly higher fuel prices and a stronger exchange Rand, resulting in 25% lower operating profit for the period.” Despite the headwinds, the Group delivered earnings before interest and tax (EBIT) of R287 million and headline earnings per share of 65 cents, 10% behind 2021 respectively, an acceptable outcome in the circumstances.

In respect of the recently concluded FRAP, “Although we were disappointed with the outcome, considering that Sea Harvest was one of the top performing companies in all sectors it applied for, the result lays a good foundation for certainty and stability to the Group for the next 15 years,” adds Ratheb.

Tough trading conditions aside, the Group completed the acquisition of MG Kailis’ fishing business on 23 May 2022. Ratheb says, “The acquisition of MG Kailis’ fishing business is transformative, representing a significant step in the execution of the Group’s investment strategy of acquisitive growth in the international seafood space, which focuses on businesses of scale in high-value seafood species. It complements and diversifies our existing business operations in Australia. The Australian subsidiary performed well, with revenue up 17% for the period. Pleasingly, our other operations continue to deliver. The Cape Harvest Foods segment increased 85% to R956 million as a result of the increased capacity at Ladismith Cheese, combined with the Mooivallei and BM Foods acquisitions.”

The Aquaculture segment also showed good growth with revenue increasing by 55% to R56 million, benefiting from increased abalone sales volumes and pricing, resulting in the segment halving its loss to R18 million.

Sea Harvest Group Board Chairman, Fred Robertson, has expressed his satisfaction with the Group’s performance. “Not only has Sea Harvest delivered a reasonable set of results given the numerous headwinds it faced that were outside of management’s control, but it has pressed forward with various transformation and strategic objectives over the past year and remains committed to driving change in South Africa. As the Group continues its journey in an ever-changing world, I am very proud that we remain at the vanguard of good governance and reporting evidenced by Sea Harvest winning the Fledgling category in the Chartered Governance Institute of Southern Africa (CGISA) / Johannesburg Stock Exchange (JSE) Integrated Reporting Awards for the second consecutive year in 2021, as well as releasing our first stand-alone Environment, Social and Governance (ESG) report earlier this year.”

In accordance with the Group’s dividend policy, no interim dividend is declared or proposed for the six months ended 30 June 2022.

Notes to Editor:

  1. The Sea Harvest Group is a vertically integrated, majority black owned, responsible seafood and agri-business.
  2. Sea Harvest Group is a proudly Level 1 broad-based black economic contributor with c.90% black ownership.
  3. The Group employs over 5,300 employees, operates c.60 vessels and 15 processing facilities in South Africa, Australia, Namibia and Mozambique, selling its products to more than 26 countries across the globe.
  4. Sea Harvest is a leading producer and marketer of premium wild and farmed seafood products
  5. The Group owns two dairy operations in Ladismith and Bonnievale in the Western Cape, producing a variety of cheese, butter and powder products.
  6. Sea Harvest Aquaculture operates two abalone aquaculture farms and two oyster farms in South Africa and Namibia.
  7. The Group recently acquired BM Foods, a leading producer of convenience products for retail and foodservice, such as dips, pies, soups, salads, olives and seafood, with processing operations in Cape Town and Johannesburg.
  8. Sea Harvest supports an ecosystem approach to fisheries (EAF) management in its wild-capture operations. Its Cape hake products and Australian prawns proudly bear the blue Marine Stewardship Council (MSC) logo – the gold standard for sustainability in the global fishing industry.
  9. Sea Harvest is committed to social upliftment and community engagement supporting various philanthropic initiatives through its Foundation in rural areas.
  10. Sea Harvest is proud to support over 450 SMMEs and artisanal fishing communities through procurement, skills development, financial support, and various initiatives which contribute to their successful operation and growth.

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