Canada-based Clearwater Seafoods has booked a 20% increase in second-quarter sales compared to the same period a year ago, driven by what the company said was “favourable market dynamics as global demand for seafood outpaces supply”.
Second-quarter sales and adjusted EBITDA for the period ended 2 July were CAD140.2m (US$108m) and CAD27.5m respectively. EBITDA was up 24% compared to the same period in 2015.
Clearwater said the figures had been boosted by seafood demand from a “growing worldwide population, shifting consumer tastes towards healthier diets, and rising purchasing power of middle-class consumers in emerging economies”.
The second-quarter figures took first-half sales and adjusted EBITDA to CAD256.4m and CAD46.3m respectively, compared to CAD192.1m and CAD31.9m over the same period a year ago, representing growth of 33% in sales and 45% in adjusted EBITDA.
The growth in sales revenues and adjusted EBITDA were due primarily to higher sales volumes, improved margins and favourable exchange rates, Clearwater said. “Volume growth was primarily attributable to langoustine, whelk and clam partially offset by shrimp.”
Gross margin as a percentage of sales increased from 22% to 24.8% “due to strong sales prices for the majority of species as well as a strengthening US dollar and (Japanese) yen against the Canadian dollar which had a CAD13.5m net positive impact on sales and margins”, Clearwater said.
However, adjusted earnings attributable to shareholders for the first half of 2016 fell CAD0.6m to CAD5.2m. Clearwater said pointed to higher interest expense due to an increase in loan facilities on 30 October related to the group’s financing of its acquisition of UK-based shellfish company Macduff.
“Operating cash flows were in line with seasonal expectations and reflect the timing of planned investments in working capital,” Clearwater said.
“Strong harvesting conditions in the first half of 2016 allowed Clearwater to invest in inventories and receivables and position the company well to achieve strong annual adjusted EBITDA and free cash flows in 2016. Free cash flows were CAD61.5m in the first half of 2016 as compared to CAD30.1m in the first half of 2015, a period that saw far less harvesting activity and therefore lower inventories.”
Clearwater CEO Ian Smith said: “Exceptional harvesting conditions – especially in May and June of the second quarter of the year – have positioned us well for a strong performance in the third and fourth quarters of 2016. We are also very pleased with the continued strong performance and results of Macduff post-acquisition as well as our recently expanded clam fleet.”
Smith said as Clearwater marks its 40th anniversary this year, and kicks off its next five-year strategic plan up to 2020, the group will “see many attractive opportunities for future growth”.
The second-quarter results follow Clearwater’s announcement earlier this year of a profits boost in 2015 from foreign exchange and higher selling prices. For the year ending 31 December, earnings rose to CAD43.5m from CAD22.6m.