Bright Outlook for Sanford

This was the message from New Zealand seafood company Sanford's managing director E F Barratt at the company's annual meeting this week.

Mr Barratt said: "We have seen prices for most of our major whitefish species such as hoki, hake, ling, southern blue whiting, snapper, trevally and toothfish finding some stability at higher price levels than previously.

"We are seeing stronger markets for our pelagic species. Skipjack tuna prices have recently recovered to more acceptable levels. Squid prices continue to move towards new record levels. Jack and blue mackerel prices are strong and barracouta demand has been stronger.

"On the aquaculture front we are seeing mussel prices consolidating at a far more acceptable level than a year ago and salmon prices have continued a firmer trend over the last six months."

Towards the end of last year Sanford acquired the Pacifica mussel business for NZ$85 million.

Pacifica Seafoods was the second largest producer after Sanford with around a 20 per cent market share and 2010 production totalled around 16,000mt, from 77 marine farms on 392 hectares along with an additional 140 hectares share farmed or leased from other farmers in the Marlborough Sounds.

Last year Sanford also acquired a 40 per cent interest in the 2,700 hectare Pegasus Bay marine farm consent which is a large open ocean site just north of the Banks Peninsula and a modern processing facility in Christchurch along with various service vessels and associated properties.

The acquisition combined two of New Zealand’s largest Greenshell mussel producers, Mr Barratt told the annual meeting that the company is looking forward to two development opportunities for which it is expecting to receive Government approval in the very near future.

The first is to domesticate and selectively breed New Zealand shellfish particularly Greenshell mussels.

The seven year programme will co-develop hatchery and life-cycle breeding families to supply spat on a commercial basis to the industry in future years.

Sanford is expected to partner with Sealord, Wakatu Incorporation and the Government through the Primary Growth Partnership in this project.

The second Primary Growth Partnership proposal has been developed jointly with Sealord and Aotearoa Fisheries based on successful trials and studies over the past four years that will enable the copmapny to more selectively harvest the desired species and sizes and in a manner which will improve the quality of the product caught.

The programme will require an investment by Sanford of approximately NZ$9 million over six years.

Mr Barratt concluded: We have certainly started this year better than we started last year.

"Based on current conditions it is likely that we will again see a stronger performance in the second half of the year than the first half of the year taking into account the closure of our Havelock plant for the first three months of the year and only four months of the Pacifica acquisition through to the end of March.

"Issues that will determine the final outcome of the year if markets continue to be strong will the catches of pelagic species such as skipjack tuna and squid.

"A major focus for the remainder of the year is to ensure we keep our working capital within manageable levels, dispose of uneconomic assets and reduce debt with a targeted reduction of $20m in the current financial year.

"Demand in Asia in the growing middle class consumers looking for higher quality seafood is likely to outstrip our ability to supply. Capitalising on this opportunity requires long term planning while returns to shareholders and share price growth have been below acceptable levels.

"Long term outlook for the seafood industry is bright," he said.