Sea Harvest processes a variety of chilled and frozen premium seafood products.

Sea Harvest Delivers Resilient Results in a Difficult Trading Environment

The Sea Harvest Group delivered a resilient set of interim results for the six months ending 30 June 2023 with the period highlighted by significant cost inflation and the continued impact of load shedding.

Group revenue increased by 18% to ZAR 3.2 billion (USD 167,978,560), driven by strong demand and higher selling prices across all four business segments, whilst earnings before interest and tax (EBIT) was 23% ahead of the same period in 2022, and headline earnings per share (HEPS) 19% ahead.

Felix Ratheb.

Sea Harvest Group CEO, Felix Ratheb, says, “Strong demand for our products, both locally and internationally, resulting in higher selling prices in all markets and channels and the weaker rand against our basket of trading currencies mitigated the material cost inflation the Group experienced compared to the same period last year.”

Discussing the Group’s South African Fishing business Ratheb added, “We continue to recover from the FRAP volume losses, which were compounded by challenging fishing conditions, due to the erratic weather and lower catch rates in the first half of the year. The team did well to mitigate the lower volumes through higher selling prices and a higher value market mix, buoyed by strong demand and a weaker rand, and, with a relentless focus on cost containment, we achieved a pleasing 15% operating profit margin in a difficult environment.”

Ratheb also touched on the Group’s Australian operations, which performed ahead of expectations during the first half of 2023, despite having to absorb six months of fixed costs associated with the MG Kailis acquisition. “With prawn fishing only starting in April, the Australian business is very much weighted to H2. The Group’s other seafood orientated business in aquaculture also remains on target with regard to its improved performance where it benefitted from a recovering Asian market, a higher value product mix, and a weaker rand, resulting in the abalone business turning profitable in the first half of 2023. We successfully acquired most of the minority shareholders in Viking Aquaculture during the period, increasing our shareholding to 82%, and we are confident on the future of the abalone business and its continued recovery,” he adds.

The Sea Harvest Group catches, processes and markets: Cape hake, horse mackerel, pilchards, anchovies, and prawns from South Africa, as well as prawns from Mozambique, as well as Shark Bay, and Exmouth prawns together with Spanish mackerel and Fish Trawl from Western Australia.

The Group’s Cape Harvest Foods segment faced a perfect storm from a supply chain perspective, challenged with lower countrywide milk flow, significant cost inflation, including a double digit increase in the milk price, load shedding and a load shedding related fire at Ladismith Cheese. “Despite these challenges and a constrained consumer, higher selling prices resulted in a 9% increase in revenue. However, the disruptions in the period weighed heavily on profitability, particularly at BM Foods, our convenience foods business, which was unable to fully recover the significant cost inflation,” states Ratheb.

Sea Harvest embraces sustainable business practices throughout its operations.

Meanwhile, Ratheb explains that the R22 million direct impact due to load shedding was exacerbated by the indirect costs associated with the significant disruption caused to the entire supply chain. “With load shedding forecasted to continue into the near future, the team is now at an advanced stage investing in renewable solutions to mitigate costs and disruptions,” he adds.

With central banks both in South African and Australia hiking rates, average interest rates have increased by 47%, doubling the interest burden of the Group.

The Group harvests wild-caught seafood off the coasts of South Africa, Mozambique and Australia and processes the catch into a variety of chilled and frozen premium seafood products.

“While local and international markets are firm and demand for our products remain strong, the trading environment remains challenging with consumers under pressure and cost increases not showing any signs of easing,” concludes Ratheb.

About Sea Harvest

The Sea Harvest Group is a leading seafood, agri-processing and branded fast-moving consumer goods (FMCG) business with a global footprint. Sea Harvest was established in 1964 and has developed a strong reputation and solid long-term relationships with its geographically diverse international customer base.

The Group harvests wild-caught seafood off the coasts of South Africa and Australia and processes the catch into a variety of chilled and frozen premium seafood products. Through Sea Harvest Aquaculture, the company farms shellfish species. The varied wild-caught and farmed products are then packed and marketed to a local and international customer base. The company's agri-processing business produces value-added dairy products, such as cheese, butter and powders, for the South African retail and foodservice markets. Sea Harvest's convenience foods business produces premium convenience foods for the retail and foodservice markets in Southern Africa.

Source: Sea Harvest

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Address:	Boulevard Office Park, Searle Street - P.O. Box 761
City:	Woodstock
State/ZIP:	(7925)
Country:	South Africa
Phone:	+27 21 468 7900
Fax:	+27 21 465 5883
E-Mail:	[email protected]
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