Fuel, dollar tear Sanford net

High fuel prices are putting the squeeze on Sanford's fleet. Picture / Greg Bowker

Sanford's September-year net profit has plunged 43 per cent to $30.4 million.

"The ongoing high value of the dollar coupled with record high fuel prices continues to seriously impact on fishing and aquaculture profitability," the fishing company's managing director, Eric Barratt, said yesterday.

Currency hedging produced returns larger than the net profit. The hedging gains amounted to $40.4 million (before tax) this year, compared with $55.2 million last year.

The insulation from forward foreign exchange cover is fast running out. At September 30, the company had cover of $13.5 million remaining with a potential gain of $5 million that will be realised by the end of this month.

Barratt said the 2006 year would continue to be a challenge at current exchange rates.

When the exchange rate was above US60c, acceptable returns would be difficult.

For Sanford, a 1c variation in the exchange rate affected tax-paid profit by $1 million.

"In the current exchange-rate environment and without further forward cover, it will be difficult to reach this year's result," said Barratt.

"As is normal in the fishing business, the final outcome for next year will depend on our success in the more variable fisheries such as pelagic species [like skipjack tuna and blue and jack mackerels] and squid and toothfish."

Sales for the year rose 4.4 per cent to $365.8 million, while operating profit before tax fell 43 per cent to $46.5 million.

Earnings per share fell to 32.1c from 56.3c, but the fully imputed dividend was held steady on 13c and will be paid on December 14.

- NZPA