Sea Harvest will enter a consolidation phase focusing on non-core asset disposals, efficiencies, and debt reduction

Sea Harvest Reports Profit Decline Amidst Challenging Market Conditions

South African seafood conglomerate Sea Harvest has announced a three-year cost-cutting strategy in response to declining hake catch rates and adverse market conditions.

The JSE-listed company, which encompasses seafood, aquaculture, and agro-processing, reported its most challenging financial year since its 2017 listing. Performance was significantly impacted by reduced hake catch rates in South Africa and diminished prawn catches in Australia.

Other contributing factors included weak abalone market conditions, persistently low global prawn prices, and elevated interest rates.

Despite these challenges, Sea Harvest achieved a 6% year-on-year increase in EBITDA, reaching R609 million ($32.5 million USD) for the year ending December 31st.

However, headline earnings decreased by 37% to R174 million ($9.3 million USD), and headline earnings per share (HEPS) fell by 45% to 55c. This contrasts with the group's 45% total HEPS growth since 2017, averaging 10% annually.

The acquisition of Terrasan Group subsidiaries, including its pelagic and abalone businesses, contributed to a 16% year-on-year revenue increase to R7.2 billion ($384 million USD).

The final ordinary cash dividend was declared at 22c per share, compared to 40c in the previous fiscal year.

Sea Harvest's profit attributable to shareholders decreased by 20% to R226 million ($12.3 million USD) from R282 million $15.3 million USD.

The group operates 49 vessels, seven fish processing facilities, and eight aquaculture operations, focusing on hake, pelagic fish, horse mackerel, prawns, Spanish mackerel, and abalone.

South African hake catch rates are currently 25% below 2021 levels, leading to a 7% reduction in total catch volumes. This decline is attributed to environmental factors, vessel losses, and an uncaught hake quota valued at R121 million ($6.4 million USD).

The South African fishing segment's EBITDA decreased by 51% to R329 million ($17.5 million USD), partially offset by price and product mix adjustments.

Australian prawn catch volumes are 28% below the ten-year average due to environmental conditions, compounded by a 23% drop in prawn prices due to market oversupply.

Abalone prices are 35% below pre-2020 levels, primarily due to economic conditions in Hong Kong and China. Lower prawn prices and volumes resulted in a R110 million ($5.8 million USD) impact, contributing to a total R534 million ($28.5 million USD) EBITDA reduction.

CEO Felix Ratheb confirmed the addition of four hake trawlers to address low catch rates, capitalizing on a 5% increase in the 2025 total allowable catch (TAC). Effort reduction strategies in Australia are also underway.

Ratheb noted improved fishing conditions in the first two months of the year and expressed confidence in a catch rate recovery. Strong demand for hake and pelagic fish continues despite lagging abalone and prawn prices.

Cape Harvest Foods, comprising BM Foods and Ladismith and Mooivallei dairy brands, delivered solid performance despite a foot-and-mouth disease outbreak, with a 4% revenue increase to R1.7 billion ($90.6 million USD) and operating profit growth to R92 million.

Net finance costs increased by 24% to R276 million ($14.7 million USD) due to higher debt levels.

Outlook:

Sea Harvest will implement a three-year strategy focused on efficiency, cost containment, cash generation, and debt reduction.

This includes modernizing the pelagic fleet, increasing factory throughput, and reducing debt by 50%.

Pelagic segment performance may be offset by increased availability of local fish and an increased initial TAC.

Aquaculture will focus on cost containment and integration benefits at Viking Aquaculture to mitigate market challenges.

Cape Harvest Foods expects continued strong performance, driven by increased milk volumes and investments.

The Australian segment anticipates improved catch volumes and market diversification.

Sea Harvest will enter a consolidation phase focusing on non-core asset disposals, efficiencies, and debt reduction, confident in its ability to capitalize on sustainable seafood demand.

[email protected]
www.seafood.media

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]
More about:

 

 

 

 

Print