Fishing group Sea Harvest, which is controlled by the Brimstone Corporation, upped its ordinary dividend per share for the year to end-December by double digits, amid a profit surge due to its recent acquisitions.
Profit after tax increased 35% to R396m, with headline earnings rising 48% to R410m, largely due to the acquisition of Ladismith Cheese and Viking Fishing.
The R527m acquisition of Ladismith Cheese in January 2019 followed on the heels of Sea Harvest’s R885m acquisition of the Viking Fishing Group and 50% of Viking Aquaculture, which was completed in July 2018.
The group said at the time that it was seeking to diversify earnings and benefit from growing consumers in natural-fat products.
Revenue at the group’s SA fishing operation rose 23% to R2.47bn, benefiting from a 10% increase in the total allowable catch in hake, as well as the Viking Fishing acquisition.
Viking, Ladismith and a better overall catch boosted Sea Harvest’s results, but its aquaculture division had unperformed, Small Talk Daily’s Anthony Clark said.
SeaHarvest could have shown bumper profits, if it were not for localised factors affecting those markets, Clark said.
The group had reported operating loss for its aquaculture segment of R30m, from profit of R3m previously, partially due to market issues in Hong Kong and China, including political unrest and trade-war-related uncertainty.
Despite its tight liquidity, Sea Harvest should have another good year ahead, and with a market valuation of R4.2bn was one of the “overlooked gems” on the JSE, said Clark.
The group upped its ordinary dividend 13% to 45c, and declared a special dividend of 5c.
Net finance costs for the period more than doubled to R101m, due to increased debt due to the acquisitions and accounting changes.
The group ended the year with R229m in cash on hand, from R782m at the end of the prior comparative period.
The group, which has a market capitalisation of R1.83bn, had interest-bearing borrowings of R1.2bn at end-December.
Sea Harvest listed on the JSE in April 2017. In afternoon trade on Monday, the group’s share price was up 0.42% to R14.45, having risen 25.65% over the past two years.
Update: March 2 2020
This article has been updated with additional information and analyst comment
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