Haikui Seafood’s results affected by enhanced competitive pressure and adverse market conditions
- Revenue increased to over 100 million Euros
- EBIT amounted to 9.7 million Euros with a still attractive EBIT margin of 9.6 per cent
- Share buyback program successfully completed
- Full-year outlook partly adjusted
Haikui’s revenue increased by 15.0 per cent to 100.6 million Euros in the first nine months of 2015 (9M 2014: 87.4 million Euros). However, this increase was mainly due to beneficial foreign exchange rate effects. Measured in the functional currency RMB, the group’s revenue decreased by 4.9 per cent to 693.6 million RMB (9M 2014: 729.1 million RMB). This decrease was mainly caused by lower sales orders received as a result of increased selling prices for frozen products and due to the strong competition, especially from low-cost countries.
With regard to the group’s product segments, the following results were recorded in the first nine months of 2015: Revenue from frozen products increased by 6.1 per cent to 73.7 million Euros (9M 2014: 69.5 million Euros). Revenue from canned products grew significantly by 49.9 per cent to 26.8 million Euros (9M 2014: 17.9 million Euros). This gain was mainly due to increased sales of higher-priced canned abalone products. Nevertheless, frozen products remained the main revenue driver contributing 73.3 per cent to the group’s total revenue (9M 2014: 79.5 per cent), while canned products accounted for 26.7 per cent (9M 2014: 20.5 per cent).
Gross profit went up year-on-year by 3.3 per cent to 14.2 million Euros (9M 2014: 13.8 million Euros). However, due to the higher raw material costs and higher direct labour costs per unit of production which could not be fully passed on to the market, the gross profit margin decreased by 1.6 percentage points to 14.2 per cent (9M 2014: 15.8 per cent). For the same reasons as well as due to higher administrative expenses, EBIT slightly decreased by 2.6 per cent to 9.7 million Euros (9M 2014: 10.0 million Euros). The same applies to the EBIT margin, which dropped by 1.8 percentage points to 9.6 per cent (9M 2014: 11.4 per cent). As a result, the net profit for the period declined by 21.7 per cent to 6.0 million Euros (9M 2014: 7.6 million Euros), resulting in a net profit margin of 5.9 per cent (9M 2014: 8.7 per cent).
Stable financial position
The group’s total equity increased by 6.6 per cent from 186.6 million Euros as at December 31, 2014 to 198.9 million Euros as at September 30, 2015, mainly due to the increase in retained earnings and the currency translation reserve. The equity ratio increased from 95.0 per cent as at December 31, 2014 to 95.3 per cent as at September 30, 2015 providing Haikui Seafood with a comfortable equity position.
Share buyback program successfully completed
On August 7, 2015, Haikui Seafood AG applied to the Frankfurt Stock Exchange to revoke the admission of its shares to trading on the regulated market. The reason for this decision was that the Management Board and Supervisory Board believe that the benefit of Haikui Seafood AG’s stock market listing no longer justifies the associated expenses. As the Frankfurt Stock Exchange accepted the application on August 18, 2015 the delisting will take effect on February 18, 2016.
In this context Haikui implemented a share buyback program. During the offer period from August 10 to September 15, 2015, a total number of 921,346 shares had been tendered. Consequently, the company now owns 921,346 treasury shares representing 8.97 per cent of the total share capital while the free float has been reduced to 3.14 per cent. The Company intends to cancel the shares bought back under the offer by way of a reduction of the share capital in accordance with the statutory provisions.
Partly adjusted full-year prognosis
The challenging business environment, the competitive environment amidst a weak global economy, the stringent inspection taken by the Chinese authorities to inspect the end product quality of Chinese seafood exporters, the tight supply of certain raw materials and rising direct labor and production costs will persist and might even become stronger in the future.
Against this background, the management of Haikui Seafood has partly adjusted the forecast for the full year 2015 given in the H1 report. The management now expects revenue in RMB terms for 2015 to decrease by around 5 per cent compared with 2014. The EBIT margin is still expected to be in a range between 8 and 10 per cent.
The full nine-month report 2015 of Haikui Seafood is available on the company’s website under the following link: http://www.haikui-seafood.com/investor-relations/publications/reports/
About Haikui Seafood AG
Haikui Seafood processes fish and seafood for the Chinese and international markets. Its products range includes frozen or canned fish and seafood, produced from a large variety of species of raw fish and seafood, including prawn, crab, various fish species and shellfish as well as cephalopods. Clients of Haikui Seafood are distributors in China and overseas, located mainly in Asia, the U.S. and Europe. Haikui Seafood employs 636 permanent employees and 726 additional temporary workers as of September 30, 2015. The company has an annual processing capacity of more than 34,000 tonnes (output). The processing facilities are located in the South-East of China on Dongshan Island, Zhangzhou, Fujian Province. Haikui Seafood operates a streamlined supply chain including self-owned processing facilities, in-house research and product development capacities as well as warehousing and cold storage facilities while simultaneously cooperating closely with raw goods suppliers.