Fishing group Sea Harvest expects to report lower first-half earnings after its SA fishing business was challenged by continued low catch rates, resulting in lower sales volumes.
The group said in a statement on Friday that it expected its basic headline earnings per share (HEPS) for the six months ended June to be 33%-38% lower at 47.6c-51.5c compared with a year ago.
Basic earnings are expected to be as much as 24% lower year on year.
The group, valued at about R2.9bn on the JSE, said the lower catch rates in its SA business, however, were offset by strong demand in all markets and channels, resulting in firm pricing.
“The late start to the prawn fishing season in Australia resulted in new season prawn being available from the second half of 2024,” it said.
It also noted reduced demand and increased competition in key abalone markets, which affected volumes, selling prices and mix, while high interest rates in SA and Australia continued to weigh on earnings.
The group’s results for the six-month period ended June 2023 included a one-off gain on purchased loans of R93m, which contributed 34c to earnings per share and headline HEPS in the comparative period.
Excluding the effects of the one-off gain on purchased loans in the comparative period, HEPS for the period is expected to increase 13%-18% to 48.5c-50.6c compared with adjusted HEPS of 43c reported for the comparative period, it noted.
In May, Business Day reported the Competition Tribunal gave the green light for Sea Harvest to acquire the fishing and abalone business subsidiaries of Terrasan in a deal that created the largest abalone business in the southern hemisphere.
In January, Sea Harvest announced that through its subsidiaries, it had acquired 100% of the pelagic fishing business of Terrasan and 63.1% of its abalone subsidiary, Aqunion, for R964m. That was by means of a combination of a cash payment of R364m and the placement to Terrasan of 60-million Sea Harvest shares at an issue price of R10 a share.
The deal saw Sea Harvest acquire Aqunion, which operates Terrasan’s abalone business including abalone farming, ranching, processing, sales and marketing, as well as the manufacture and sale of aquafeed for use in abalone farming.
Sea Harvest, which competes with Oceana and Premier Fishing, welcomed Terrasan as its second-largest shareholder, saying the “transformative transaction creates the largest abalone business in the southern hemisphere and one of the largest black-owned diversified fishing businesses in SA”.
Sea Harvest said at the time that after the acquisition it would be in a position to offer a more complete suite of products, including fishmeal, fish oil and canned fish.
The purchase of the pelagic business is also set to enhance the earning stability of its fishing operations since the performance of that business is countercyclical to hake.
Moreover, export earnings will increase after the acquisition as fishmeal, fish oil and abalone are exported products.
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