Sea Harvest benefited from higher commodity prices this year, reporting a 3% boost in interim revenue despite challenging fishing conditions which lowered the group’s output.
The black-owned, vertically integrated seafood company reported an operating profit of R310.97m for the first six months of this year, a striking 23% increase above the first half of 2023.
The higher profit was driven by higher commodity prices locally and overseas, offsetting the group’s weak output for the period.
Sea Harvest said it continued to be affected by challenging fishing conditions in its hake business, resulting in 5% lower catch volumes. However, this was more than offset by improved pricing as a result of firm demand in all export and local markets and channels.
As a result, segment revenue for the company’s fishing unit increased 27% to R1.99bn, while operating profit increased 26%.
The company’s anchovy and pilchard fishing subsidiary, Sea Harvest Pelagic, also benefited from firm global fish meal and fish oil pricing.
However, the diminished fishing output weighed on Sea Harvest’s basic headline earnings per share (HEPS), down 36% from the previous comparable period.
The group’s performance benefited from improved pricing and strong demand in the SA Fishing Group, it said. Performance, however, was constrained by continued low catches in the SA Fishing Group, deteriorating market conditions in the aquaculture segment, and higher interest rates in SA and Australia.
Net asset value per share climbed 15% higher for the period, as the group concluded the acquisition of Sea Harvest Pelagic — which specialises in anchovies and pilchards — and 63.07% of abalone business Aqunion.
Sea Harvest said the transaction “rounds out the group’s exposure to all material wild-caught fisheries in SA, while the abalone business doubles in size, thereby creating an aquaculture business of scale. Importantly, the acquisition has increased the group’s hard currency earnings, created a stronger merged business, increased black ownership in the fishing and abalone industries, and broadened Sea Harvest’s shareholder base.”
The transaction also benefited Sea Harvest Aquaculture, which reported a 64% increase in segment revenue despite being “challenged by reduced demand and increased competition in key abalone markets that have impacted sales volumes, prices and mix”.
Sea Harvest’s earnings were further weighed down by its two remaining divisions, Cape Harvest Foods and Sea Harvest Australia, which saw segment revenue decrease 25% and 19%, respectively. Excluding the effect of a deconsolidation in the second half of 2023, Cape Harvest Foods’ revenue was down only 2%, as a “tough consumer environment” drove lower sales volumes.
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