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Ngai Tahu Seafoods back in the black

NEW ZEALAND - Ngai Tahu Seafoods has posted a $9.2 million surplus for the 2006-2007 financial year.

The $9.2M EBIT is on the back of revenue of $76M dollars. This compares to a $22.8M loss for the previous year, which was largely due to a $20.7M balance sheet write-down.

CEO Geoff Hipkins said the performance turnaround is pleasing after a "tough couple of years".

"This last year was about finishing the process of rationalisation we started in 2005-06, especially reducing inventory and operating costs," Mr Hipkins said. "We’ve also focused on consolidating the company’s position in New Zealand, and targeted our efforts on key products and developing niche markets," he added.

For example, onshore the company has formed a joint venture with iwi on the Chatham Islands to process abalone (paua), kina and prime wetfish species. Offshore it has done a great deal of work in building up live lobster exports to China.

"Abalone and live lobster sales brought in $7.3 M and $24.4M respectively. There have also been improved domestic wholesale margins as well as growth in retail sales," said Mr Hipkins.

Ngai Tahu Holding Holdings Group Chairman Wally Stone said the turn around "was a very satisfying one for the Group".

"I am confident that Ngai Tahu Seafoods now has strong foundations and a much clearer strategic direction. However, it would be unwise to get carried away by this result alone, impressive as it is. The volatility of world financial markets in recent weeks and months carry risks for the company going forward," he said.

Even though the value of the kiwi dollar has fallen markedly in the last few weeks, it could still be considered to be on the high side for exporters. Stone said he would be more comfortable if it was around 60 cents against the US dollar.

"For every cent our currency goes up against the US dollar it costs the company $500,000 in profit per annum. However, if there is a rapid economic slowdown in our key export markets we could well face a different set of challenges," Mr Stone said

Mr Hipkins said that the New Zealand seafood industry also faced stiff competition from farmed fish closer to key markets, and from other low cost protein sources like chicken.

"This highlights the need to focus on niche marketing and to develop new markets like live lobster exports to the USA for larger size grades. It is also a good example of why we think it is important for New Zealand seafood exporters not to get locked in commodity markets," he said