Shares in aquaculture group Sea Harvest rose by more than 6% on Wednesday after it announced that it expects nearly 300% growth in full-year earnings as the fishing business continued to deliver growth.
Sea Harvest said it expects headline earnings for the year to end-December to surge more than threefold for the period, marking a turnaround for the group despite major writedowns in parts of the business.
Headline earnings per share are expected to range at 216c-222c, up from 55c a year ago. The surge was mainly driven by Sea Harvest’s core fishing operations where the group benefited from higher catch volumes, better pricing and tighter cost controls.
According to the group, the hake business led the recovery, helped by higher catch rates, improved prices and efficiency gains. The pelagic division also posted better results as productivity improved, while the dairy business benefited from higher milk volumes.
Cost control helps lift profitability
Sea Harvest said it kept a close eye on costs across the group, which played a role in lifting earnings.
However, the strong headline profit growth came despite impairments, which affected other earnings measures. These included writedowns in the Australian segment after a 50% effort reduction in the Shark Bay prawn fishery as well as impairments in the aquaculture business after abalone farms at Kleinzee and Whale Rock were mothballed amid weak demand from China and Hong Kong.
The group also recorded impairments linked to the proposed sale of Ladismith Cheese, which has been classified as a discontinued operation.
Sea Harvest previously announced plans to dispose of the cheese business and its results now separate continuing operations from discontinued ones in line with accounting rules, it said.
The group will release the full-year results on March 3.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.