Sea Harvest posts positive H1, avoids impact from civil unrest

Cape Town, South Africa-based Sea Harvest Group has announced positive interim results for the six months ending 30 June, 2021 – supported by the strong performance of its South Africa fishing operations, Cape Harvest Foods segment, and its Australian venture.

Sea Harvest Group CEO Felix Ratheb said the company posted a 5 percent increase in revenue for the six months, increasing to ZAR 2.1 billion (USD 143.3 million, EUR 121.4 million) from ZAR 1.9 billion (USD 136.2 million, EUR 115.4 million). The company’s gross profit increased 2 percent to ZAR 676 million (USD 46 million, EUR 39 million), compared to ZAR 665 million (USD 45.3 million, EUR 38.4 million).

The company’s operating profit also increased, by 26 percent, to ZAR 323 million (USD 22 million EUR 18.7 million), and its earnings-per-share increased 27 percent to ZAR 0.77 (USD 0.05, EUR 0.04).

The company’s profit after tax attributable to its shareholders increased by 29 percent to ZAR 218 million (EUR 12.6 million, USD 14.8 million) while headline earnings reached ZAR 202 million (USD 13.8 million, EUR 11.7 million).

Despite the seafood market volatility caused by COVID-19, Ratheb said Sea Harvest went ahead to “prove its resilience and defensive nature in delivering headline earnings.”

In 2020, Sea Harvest reported earnings up 10 percent to ZAR 4.4 billion (USD 292.9 million, EUR 243.16 million) and an operating profit of ZAR 639 million (USD 41 million, EUR 34.8 million), up 5 percent over the previous year.

Sea Harvest's continued positive performance in 2021 was largely driven by revenues from its South Africa seafood business, which generated ZAR 1.3 billion (USD 89.9 million EUR 76 million) – a 2 percent increase – on the back of “increased vessel availability, strong catches, firm export markets, and good retail trade.” The performance was “despite a 5 percent reduction in the total allowable catch (TAC) in early 2021 and a 5 percent strengthening in the [South African] rand.”

A boost was also received from Cape Harvest Foods' operations, which generated revenues of ZAR 516 million (USD 35 million, EUR 29.8 million), nearly 10 percent more than the ZAR 470 million (EUR 27 million, USD 32 million) generated in the first half of 2020. And Sea Harvest’s Australian operations - it finalized a purchase of Mareterram in 2019 - also improved, with its revenues increasing 2 percent to ZAR 231 million (USD 15.7 million, EUR 13.3 million).

“With the introduction of additional product formats, revenue in the aquaculture segment more than doubled to ZAR36 million (EUR2 million USD 2.5 million),” Ratheb said.

The violence that rocked South Africa after the arrest and imprisonment of the country's former president, Jacob Zuma, on contempt of court charges, appear to have left Sea Harvest operations in the country unscathed.

“Fortunately, the July 2021 unrest in KwaZulu-Natal and Gauteng had minimal impact on the group’s operations,” Ratheb said.

Although Ratheb said it is his opinion that global seafood markets are generally more settled since the first outbreaks of COVID-19 in December 2019, he said it remains “difficult to predict the impact of the pandemic on both the supply and demand side.

"The situation is extremely fluid," he said.

Europe, the company’s largest market, is so far making good progress in rolling out its vaccination program, which is paving the way for gradual reopening of foodservice and hotel, restaurant, and catering markets on the continent, Ratheb said.

“Further, the majority of foreign currency sales are hedged at better exchange rates than both the 2020 financial year and the first half of 2021,” Ratheb said.

Ratheb also expressed concern regarding the impact of the delta strain of COVID-19 in South Africa, which he said is complicating matters for the seafood market there.

The pandemic has hit Sea Harvest hard, with the company reporting 796 positive COVID-19 cases to date and eight staff deaths. But Ratheb said an estimated 88 percent of employees with delta variant-related cases are recovering.

“A focused approach of securing and administering COVID-19 vaccines to the Sea Harvest Group’s employees has progressed well, with the first vaccines administered on-site on 23 July, 2021, and at the time of writing, 30 percent of the group’s employees had been vaccinated,” Ratheb said.

Meanwhile, the recommencement of the 2020/2021 fishing rights allocation process in October 2020 has raised Ratheb's optimism the allocation will culminate by December 2021, “therefore also not impacting operations in the second half of 2021.”

“As a Level 1 B-BBEE contributor with over 80 percent black ownership, the group believes it is well-placed to renew its quota allocation for the next 15 years, and management has dedicated significant resources to ensure the future sustainability of the business,” Ratheb said.  

Photo courtesy of Sea Harvest Group