Fishing group Sea Harvest sounded a note of caution on its ability to maintain the pace of earnings growth, saying on Monday it was difficult to predict the effect of the pandemic on the supply and demand of its fishing products.
While acknowledging the accelerated rollout of Covid-19 vaccinations in Europe, its biggest export market, the company said the response in other markets was varied, implying that this could have a knock-on effect on the opening up of the hospitality industry, which is a vital source of business for its products.
“While markets are generally more settled since the first outbreaks in December 201, and living with Covid-19 has become the norm, it is difficult to predict the impact of the pandemic on both the supply and demand side as the situation is extremely fluid,” Sea Harvest said on Monday, adding that the particularly infectious Delta variant, which is responsible for the bulk of the third wave, “is complicating matters”.
The company, which listed on the JSE in 2017 and is best known for its frozen hake cuts, is owned by BEE company Brimstone Investment Corporation.
Sea Harvest increased its first-half headline profit by 19%, as hotels and restaurants gradually opened in Europe amid a ramp-up in the Covid-19 vaccine drive.
Consumer demand patterns flattened in SA in the six months to end-June from a year ago, which was characterised by the first hard lockdown restrictions, leading to the stockpiling of key foodstuffs.
Interim headline earnings rose 19% to R202m, boosted in part by foreign exchange and fuel hedge gains.
Group revenue was up 5% to R2.1bn, as the SA fishing segment grew revenue 2% to R1.32bn despite a 5% reduction in the total allowable catch in early 2021 and a gain of 5% in the rand against the euro.
The Cape Harvest Foods segment saw revenue rise 10% to R516m, driven by higher volumes and firm pricing. Revenue in Sea Harvest Australia grew 2% to R231m.
Revenue in the aquaculture segment surged 164% to R36m, off a low base, but the division still made an operating loss of R37m, which was slightly lower than the year before.
The curtailment of air freight and associated inflated freight costs from SA, together with lockdown restrictions and a slow pace of vaccine rollout in the Far East, continue to severely affect the aquaculture segment, the company said.
Sea Harvest’s share price was unchanged on Monday at R13, valuing the company at R3.8bn.
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.