A product recall valued at more than US$9m has had a negative effect on the performance of Canadian seafood business High Liner Foods.

In the 26 week period to 1 July the firm recorded sales of US$508.1m, down from US$515.8m in the corresponding period last year, while net income was even more markedly down at US$11.4m compared to US$19.3m in the first half of last year.

And adjusted EBITDA was down at US$35.7m compared to US$47.7m in H1 2016.

On a quarterly basis things look better with quarterly sales in Q2 2017 of US$254.8m compared to US$242.7m in the second quarter of last year.

Henry Demone, chairman and, recently appointed CEO, of High Liner Foods, said: “As expected, year-over-year sales volume improved in the second quarter, bolstered further by the acquisition of Rubicon on May 30, 2017, however, the impact of a product recall served to offset a portion of this improvement and contributed to inefficiencies at our manufacturing facilities. 

“Recovery from the product recall and improvements in plant performance are expected to return us to year-over-year earnings growth in the back-half of this year.” 

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By GlobalData

Earlier this year the company announced a voluntary recall of certain of its seafood products sold in Canada that may contain a milk allergen that was not declared on the ingredient label and allergen statement, a recall that was expanded later following advice from a US-based ingredient supplier.

As a result, High Liner said that during the 13 weeks ended 1 July it saw losses of US$8.6m on top of initial losses of US$700,000.

The losses related to the return of destroyed product and direct incremental costs incurred by the company related to the rework of product, consumer refunds and customer fines.

Additionally, High Liner said the sale of its New Bedford scallop business in September last year also had the impact of lowering sales volume.

In terms of future outlook, Demone said: “Having returned to year-over-year organic sales volume growth, we believe continued improvement in our manufacturing operations will return the company to year-over-year earnings growth in the third and fourth quarter of 2017.”