Foodservice gains lift High Liner's results above pre-Covid levels in Q1 2023

High Liner Foods posted increased sales, earnings, and profit during Q1 2023 as strong performance in the company’s foodservice categories outweighed slowing results at retail. 

For the 13 weeks ending 1 April, 2023 the company's sales rose USD 34.5 million (EUR 31.8 million), or 11.7 percent, to USD 329.2 million (EUR 303.5 million) from USD 294.7 million (EUR 271.7 million) posted in Q1 2022. Sales volumes expanded 4.9 percent, or 3.6 million pounds, to 77 million pounds.

The company posted adjusted earnings before interest, taxes, depreciation, and amortization (EBIDTA) of USD 31.2 million (EUR 28.7 million) in Q1 2023, up 10.2 percent, or USD 2.9 million (EUR 2.6 million), from Q1 2022. However, the company’s adjusted EBITDA as a percentage of sales decreased to 9.5 percent from 9.6 percent. 

The company has now recorded eight consecutive quarters of adjusted EBITDA growth, High Liner Foods President and CEO Rod Hepponstall said during an investor call. 

High Liner also saw an increase in its gross profit in Q1 2023, as it hit USD 68.4 million, up 10.4 percent, or USD 6.4 million (EUR 5.9 million), over the USD 62 million (EUR 57.1 million) the company posted in Q1 2022. 

“Global pressures on supply chains are much improved compared to the same time last year,” Hepponstall said. 

However, the company has seen a shift in the market for its products. Through the height of the Covid pandemic, Hepponstall and High Liner Chief Commercial Officer Anthony Rasetta said the strength of the company’s retail business helped offset losses in its foodservice category. However, that trend has largely reversed as U.S. retail spending has fallen due to inflation.

High Liner's retail partners are starting to shift their buying patterns to match consumer behavior, Rasetta said.

“Our retail customers want to change their product offerings by reducing the branded offerings in exchange for private label,” he said.

High Liner’s results largely reflect larger macroeconomic trends in U.S. food sales, with private-label sales growing, and spending on branded or premium products shrinking.

High Liner Chief Financial Officer Paul Jewer said the positive earnings, sales, and profit, despite the downturn in retail sales, reveal the success of the company's diversification efforts.

“In terms of the magnitude, the foodservice growth was more than enough to offset the retail decline,” he said.

High Liner's Q1 2023 foodservice sales volume exceeded its pre-Covid foodservice sales, Jewer said.

High Liner has increased its business in non-commercial channels, such as schools, hospitals, and long-term care facilities, Rasetta said.

“We’re gaining share in the marketplace overall, we continue to have really sustained success in our areas of development,” he said.

The company has also made gains in more “non-traditional” sales spaces.

“For example, following a new business win during Q1, a leading national convenience store chain in Canada is featuring a fish sandwich on its menu for the first time,” Rasetta said.

Jewer said the company expects to see the retail market remain soft in Q2 2023, based on current figures. 

“We’re certainly seeing the retail trends continue into the first part of the second quarter,” Jewer said.

Hepponstall said that despite the downturn in retail, the company is performing well compared to others in the category.  

“Our retail business is performing in line with the category overall,” he said. “To mitigate the impact, we will continue to invest in our brands and work closely with our customers to ensure we are offering the right value at the right time."

The company’s Q1 performance represented a strong start to 2023, Hepponstall said.

“The strength of our foodservice business today speaks to our track record,” he said. “We continue to win market share in priority areas such as casual dining, QSR and fast-growing popular species such as shrimp. Once again, the diversification of our business is a source of stability and enables us to be resilient in the face of economic headwinds.”  

Photo courtesy of High Liner