Sea Harvest records profits despite economic challenges in financial year 2023

SOUTH AFRICA – JSE-listed seafood company, Sea Harvest has navigated a challenging financial year to achieve a 15% growth in earnings before interest and taxes (EBIT), reaching R576 million in the 2023 financial year.

Despite this positive performance, the group’s profit after tax attributable to shareholders experienced a 9% dip, settling at R282 million compared to R310 million in the prior year.

The company reported a notable increase in gross profit, rising by 29% to R934 million, with the gross profit margin expanding to 31%, up from the previous year’s 26%.

The positive results were attributed to strong demand across all markets, improved pricing, and a 43% hard currency exposure that allowed Sea Harvest to benefit from the weaker rand.

However, challenges such as difficult fishing conditions, above-inflation cost increases (including fuel), persistent load shedding, and global pressure on prawn prices offset the positive aspects.

Headline earnings decreased by 6% year-on-year to R275 million, with headline earnings per share dropping to 100c, 5% lower than the previous year’s 105c, primarily due to a 47% increase in average interest rates.

Sea Harvest’s CEO, Felix Ratheb, expressed satisfaction with the company’s overall performance, considering the challenges faced.

Despite lower volumes, Sea Harvest reported a 6% year-on-year increase in revenue to R6.2 billion, driven by strong price increases and a weaker rand against the Australian dollar and the euro.

The South African Fishing division of Sea Harvest recorded a revenue increase of 10%, reaching R3.03 billion, with an operating profit increase of 12% year-on-year to R391 million.

The Aquaculture division also saw positive results, with a 15% revenue increase to R136 million, although it narrowed its operating loss by 39% to R24 million.

Cape Harvest Foods, on the other hand, faced challenges, experiencing an 8% decrease in revenue due to the deconsolidation of BM Foods.

Load shedding and environmental challenges impacted milk flow, resulting in lower sales volumes. Despite this, Cape Harvest Foods delivered an operating profit of R81 million for the year.

Sea Harvest Australia faced challenges with a reduction in prawn prices globally, resulting in a lower operating profit of R15 million compared to R45 million in the prior year.

Sea Harvest actively mitigated production losses arising from load shedding, incurring costs of R46 million.

Looking ahead, Sea Harvest anticipates persistently soft prawn pricing in the Australian segment and emphasizes managing costs and inventories through diversification.

 Ratheb concluded by expressing confidence in the business’s future, citing the conclusion of the Fishing Rights Allocation Process as a positive step for the company’s growth.

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