Dollar dealings snag Sanford

Currency hedging and fuel prices continue to concern Sanford.

The wrong call on currency hedging has seen fishing company Sanford's latest half-year profits savaged by the higher dollar and extra fuel costs.

Earnings before interest, tax, depreciation, amortisation, forex gains and asset sales actually rose 30 per cent from $19.1 million to $24.9 million, in the six months to March 31. Revenue was up 6 per cent at $188 million.

But the end to currency hedges meant a higher dollar and increased fuel costs slashed net profit by 26.9 per cent from $15.2 million to $11.1 million.

However, the weaker dollar is expected to sweeten Sanford's prospects in the second half, managing director Eric Barratt said yesterday.

Barratt said Sanford previously took out hedging at US40c to the dollar for three years when the kiwi was weak.

It was thought then that three years was enough but the hedges ran out during the half year as the dollar soared.

"In hindsight we were wrong - we should have gone out four years."

Barratt said Sanford had not re-hedged yet, despite a weaker dollar, as the company was waiting for the currency to fall further.

However, if the dollar remained at US60c or lower the company said it should achieve improved returns in the second half.

Higher fuel prices, which added $3 million to vessel operating expenses in the latest half-year, continued to be a problem: "That affects us in both our vessels and in ocean freight."

But Sanford, which exports 90 per cent of its seafood, saw current export markets as relatively positive.

"The final outcome of the year will depend on continuing first-half catch rates in the Pacific tuna fishery and progress in our inshore, deepwater and aquaculture operations," the company said. Sanford shares closed unchanged at $4.90.