China Fishery profit up 23.5% to US$116.5mln

The company sees sustained growth as demand for fish is expected to remain robust while seafood prices are also on a positive trend.

Singapore Exchange Mainboard-listed industrial fishing company China Fishery Group Limited (“China Fishery”) on Thursday reported its results for the full year ended 28 September 2010 (“FY2010”).

Group revenue increased by 10.4% from US$488.2 million to US$538.9 million attributed primarily to higher sales volumes in the North Pacific trawling operations, higher fishemeal selling prices and the maiden full year contribution from its South Pacific trawling operations. By geographical segments, sales to the PRC accounted for 69.6% of the Group’s revenue. Japan & Korea accounted for 12.8%, Europe accounted for 9.8% and South East Asia, West Africa and other markets accounted for the remaining 7.8%, according to a China Fishery report.

In terms of profitability, the Group posted a significant increase in gross profit, which rose 30.2% from US$153.2 million to US$199.4 million in FY2010 from higher operational efficiency in both trawling and fishmeal operations.

With enhanced efficiency, the Group was able to close 3 fishmeal plants in Peru and reduce the number of vessels in operation in North Pacific and Peru during the year, leading to improved utilisation and lower cost of sales and vessel operating expenses.

Net profit increased by 23.5% from US$94.4 million to US$116.5 million despite higher expenses due to the increased sales volumes and the Group’s larger scale of operations. Earnings per Share increase from 10.97 US cents to 13.03 US cents despite an enlarged equity base after the share placement to The Carlyle Group in July 2010.

On 17 November 2010, the Group signed a US$425 million Club Loan Facility Agreement with five international banks. The Facility is fully committed for four years and comprises a term loan facility of US$340 million and a revolving loan facility of US$85 million. The Facility will be used primarily for refinancing of existing debts and also for financing the Group’s general working capital needs.

Commenting on the Group’s outlook, Group Managing Director Mr Ng Joo Siang said, “In staying committed to our 3-pronged growth strategy of increasing market share, improving efficiency and utlisation of our vessels, and increasing our equity base, we believe we are on track for another year of growth in FY2011. Demand for fish, especially in emerging markets like China and Africa, is expected to remain robust. Seafood prices are also on a positive trend. The Group plans to capitalise on these growth opportunities by seeking acquisition opportunities in new geographical markets, as well as consolidation opportunities in existing markets. With the placement to The Carlyle Group and the recent Club Loan facility, we believe the Group is well positioned for expansion.”

Mr. Ng added, “The Group has made good progress in enhancing its operating efficiencies in recent years. We continued to streamline our fishing fleet and fishmeal processing plants in Peru during the year and will seek to further improve our efficiency and utilisation where possible. To this end, during the South Pacific non-fishing season, we plan to deploy our South Pacific fleet to Mauritania – a fishing ground in Africa rich in target species such as horse mackerel and sardines, to further enhance utilisation. We also have plans to upgrade our fleet to improve efficiency. Against a backdrop of demand exceeding supply and with our focused growth strategy, we remain positive of the Group’s continued profitability in FY2011.”