Sealord results marred by Argentinian impairment – other units prosper

Full-year profit dented by a charge against its South American business, where a soaring peso and rampant inflation are driving up costs.

Sealord, New Zealand's second-largest fishing company, reported a full-year profit that was dented by a charge against its Argentinian business, where a soaring peso and rampant inflation are driving up costs.

Profit was $5.2 million in the 12 months ended September 30, from $13.4 million in the corresponding 15 month period, according to the Nelson-based company's annual report. Sealord's holding company, Kura, changed its balance sheet in the interim. Sales were $487 million in the latest year.

Sealord, which is jointly owned by Maori tribal interests through Aotearoa Fisheries and Japan's Nippon Suisan Kaisha, took a $10 million charge against its Yuken business in Argentina in 2012, notes to its accounts show.

That business also had an operating loss of $7 million in the period, so effectively $17 million was shaved off Sealord's results in the latest period.

"The fishery is pretty much in the same state in US dollars but when you convert it back (to pesos), internal costs are massive," Jason Dale, Sealord's chief financial officer, told BusinessDesk. "Without Argentina, the business did better" in the latest year.

The peso is at a record low 5.1322 per US dollar. It weakened to 4.695 at September 30, 2012, from 4.204 a year earlier. Argentina's annual inflation may be running as high as 26 percent, though the government disputes the numbers and puts out its own series which shows a slower pace of price increases.

That business may not be such a drag going forward. Mr Dales says Sealord is "working with people to acquire parts of the business".

The company kept the dividend payment unchanged at $160,000 a share, or a total of $16 million. The payment is based on the previous completed year and so relates to 2011.

Total liabilities in 2012 rose to $333 million from $291 million, with more classified as non-current and less as current.

(BusinessDesk)