April 19, 2007
New Zealand's Sanford issues profit warning
Fish exporter Sanford warned of a disappointing first half result, after a strong New Zealand dollar cut into profits and the weaker US market dampened sales.
The New Zealand dollar is still growing despite having wiped out US$7 million in foreign exchange earnings as it remains close to a 23-year high.
The Auckland company issued the warning ahead of the announcement at the end of the month of its result for the half-year to the end of March.
The strength of the New Zealand dollar is affecting earnings and causing crippling foreign exchange losses, managing director Eric Barratt told the stock exchange.
While before-tax profit was expected to increase slightly, foreign exchange losses compared with a gain of the same amount for the same period last year, Barratt said.
However, the company's half-year profit would be boosted by US$6 million from the sale of the Sanford's Argentine investment.
Last year's interim after-tax profit was US$11 million, a 28 percent drop from US$15.4 million. However, revenue grew by 6 percent to US$188 million.
Revenue for the first six months was down 2 percent on the previous year. However, sales had been up strongly, 15 percent, in the first three months of the year.
While demand has been strong in Europe, weaker markets in the US have resulted in lower volume sales.
Catches and aquaculture production had been satisfactory at 6 percent ahead of last year.
The sale of Sanford's 15 percent stake in Canadian company Fishery Products International could result in a one-off gain of US$20 million, the company added.
Revenue was down 2 percent for the six months ended March 31, as disappointing sales in the second quarter reversed a 15 percent rise in the first three months. Still, catches and aquaculture production levels had been satisfactory, at 6 percent ahead of last year.
Earnings before interest, tax, depreciation and abnormals was expected to increase slightly for the six months ended March 31.
