April 21, 2014
China's seafood processor Haikui records 39.7% plunge in revenue
Chinese seafood processor Haikui Seafood's revenue fell by 39.7% to US$162.49 million in 2013, compared to US$269.57 million in 2012 as a result of the challenging market environment in China.
Other factors influencing this decline and leading to lower selling prices and reduced sales volumes were keener market competition, tighter supply of raw materials as well as the longer inspection time taken by the Chinese Inspection and Quarantine Authorities on export-bound products.
Besides, the difficult external market environment especially affected the frozen products segment of the firm, with lower sales volume of high value products such as crabs and prawn. Revenue in this segment declined by 44.9% (from €172.2 million, or US$237.93 million in 2012 to €94.8 million, or US$130.99 million in 2013). Revenue for canned products also showed a slight decrease: 0.5% to €22.8 million, or US$31.50 million (in 2012: €22.9 million, or US$31.64 million).
The firm reported a drop in overall gross profit by 57.8% to €21.2 million, or US$29.29 million, from €50.3 million, or US$69.50 million in 2012, resulting in a gross profit margin of 18.0%.
Due to the lower revenue and gross margin as well as increased distribution expenses, EBIT dropped by 63.8% from €44.0 million (US$60.80 million) in 2012 to €15.9 million (US$21.97 million) in 2013, representing an EBIT margin of 13.6%.
The challenging external conditions affecting the business of Haikui Seafood are expected to continue in 2014. Given the current situation and although revenue in Q1 2014 is expected to be lower compared to Q1 2013, management expects revenue in RMB terms to increase by at least 5% to 10% in 2014. EBIT margin is estimated to be in the range of 11% to 13%.
Haikui Seafood pursues a clear and efficient business strategy to better respond to the risks and challenges the company is faced with.
"First of all we want to increase the efficiency and productivity of our production through the construction of a new factory. After securing the land use rights and the financing for our new facility in Dongshan at the end of 2013, we have commenced works on the detailed planning. The next operational milestone will be the start of the construction work", expressed Chen Zhenkui, Haikui Seafood CEO.
Furthermore, the company plans to increase its investments in research and development to broaden its product portfolio, especially the extraction of compounds from marine processing by-products. In addition, Haikui Seafood will continue to focus on its geographical expansion to capture market share and expand its supplier base to secure the supply of raw materials.
