JSE-listed fishing and food manufacturing group Sea Harvest has grown its earnings a share for the year ended December 31, 2021, by 9% year-on-year to 168c.

This compares with earnings a share of 154c in the prior financial year.

Profit after tax attributable to shareholders of Sea Harvest increased by 9% year-on-year to R470-million, compared with R431-million in 2020.

Sea Harvest declared a full and final cash dividend of 56c in the year under review, compared with a full and final cash dividend of 45c apiece declared in the prior year.

Group CEO Felix Ratheb says 2021 demonstrated the group’s sheer mettle against waves of continued uncertainty.

He explains that while Sea Harvest’s different business segments delivered a mixed performance, the overall results were pleasing, given recurring impacts from the Covid-19 pandemic for another year.

Ratheb mentions that the company succeeded in executing its growth strategies within its dairy business by increasing production capacity in the powder and butter segments and acquiring the Mooivallei Suiwel business to provide additional cheese capacity.

The increasing capacity growth strategy involved commissioning a third powder plant and a new butter factory within the Ladismith Cheese brand.

In the year under review, Sea Harvest also completed the acquisition of 53.7% of BM Foods Group, which diversifies the company’s South African food offering into new categories – including convenience and prepared foods.

The South African Fishing operation performed well, contributing revenue of R2.6-billion in the year under review, which was 3% lower than in 2020, owing to a 5% reduction in the total allowable catch (TAC) in 2021, a 7% strengthening in the rand to the euro and supply chain disruptions.

Benefiting from improved fishing conditions, increased vessel availability, factory efficiencies and R142-million in hedge gains, the South African Fishing segment increased its operating profit by 18% year-on-year to R672-million, with the operating profit margin expanding to 25%.

The Sea Harvest Aquaculture segment continued to be impacted by the curtailment of international air travel and resultant inflated freight costs from South Africa, together with persistent lockdown restrictions in the Far East.

Despite the tough trading conditions, additional abalone product formats and strong live abalone sales growth resulted in higher revenue of R92-million in the Aquaculture segment, which was a year-on-year increase of 72%. This helped the segment narrow its operating loss to R64-million.

The Cape Harvest Foods segment experienced significant organic and acquisitive growth in the year under review, resulting in revenue increasing by 28% in 2021 to R1.3-billion.

Ladismith Cheese faced significant headwinds during the period and, although revenue increased by 5%, the business was unable to fully pass on significant milk price increases, exacerbated by absorbing higher costs related to the increased installed capacity that could not be fully used in time.

As a result, operating profit in the Cape Harvest Foods segment decreased by 45% year-on-year to R52-million.

Discussing the Sea Harvest International segment, the company reports that its Australian operation continued the good performance of 2020 and contributed R554-million to group revenue, up 2% year-on-year, despite a 5% strengthening of the rand to the Australian dollar.

The segment recorded operating profit of R31-million, which was 18% lower than in 2020.

Operating profit adjusted for acquisition-related costs in 2021 and Covid-19 relief benefits in 2020 was R41-million, up 71%, at an operating profit margin of 7%.

In conclusion, Sea Harvest explains that despite the 5% reduction in the TAC in 2021, a stronger rand, a 21% increase in the price of fuel and a R64-million operating loss in the Aquaculture segment, the group delivered an operating profit of R691-million, which was 10% higher year-on-year, compared with 2020’s operating profit of R629-million, with the group operating profit margin expanding to 15%.

Chairperson Fred Robertson says Sea Harvest’s performance in 2022 is highly reliant on the outcome of the 2021/22 fishing rights allocation process, which allocates resources in a sustainable manner and proposes fees payable in respect of applications for commercial fishing rights.