China Fishery profit jumps to $90mln

Gross profit margin up to 38.1% as company continues benefiting from growing fish, fish products demand.

Singapore Exchange Mainboard-listed industrial fishing company China Fishery Group Limited on Wednesday reported its second quarter (2QFY2010) and half year results for the financial year ending 28 September 2010, according to a China Fishery report.

In 1HFY2010, group revenue increased by 1.5% to US$275.5 million from US$271.4 million. In terms of profitability, gross profit was up 21.5% to US$105.1 million from US$86.5 million while gross profit margin rose to 38.1% from 31.9% on the back of greater economies of scale and higher operating efficiencies in the North Pacific trawling operations and higher fishmeal selling prices. Net profit reached US$65.2 million from US$60.0 million, and in line with the increase in net profit, earnings per share rose to 7.6 US cents from 7.0 US cents.

The Group's trawling operations, which accounted for 83.5% of total revenue, achieved a 9.8% increase in revenue from US$209.6 million to US$230.2 million. This was mainly attributable to higher catch volume from the North Pacific trawling operations arising from planned un-utilised fishing quota and higher total allowable catch.

Sales generated from fishmeal operations, which accounted for 16.5% of total revenue, fell by 26.7% from US$61.8 million to US$45.3 million. The reduction was mainly due to lower sales volume from lower inventory carried forward.

The Group's South Pacific fleet is in place and ready to commence operations for the region's major fishing season from April to October, and China Fishery expects a significant revenue contribution from South Pacific operations in the coming half-year.

Commenting on the Group's outlook for the remainder of the financial year, Group Managing Director, Mr. Ng Joo Siang said: "2010 is set to be a milestone year for China Fishery. We are expecting growth from all 3 areas of our operations. For the North Pacific trawling operations, with a higher expected catch volume and positive market demand for our products, we anticipate achieving stable growth for this sector. Although the first fishing season in Peru will start in mid May, the Group has already contracted to sell its fishmeal at a record high average price of US$1,640 per MT as compared to US$900 per MT in last year. This significantly higher fishmeal price is expected to have a positive impact on the Group's revenue and profitability. Our new fishing operation in the South Pacific has started its activities in April and we expect to see positive contribution to results starting from the second half of FY2010.

"Just last week, we announced the acquisition of a Peruvian fishing company that will allow China Fishery to increase its quota from 4.85% to 5.08% in the North Peru fishing region, and from 7.11% to 7.87% in the South Peru region. Our larger quota share in Peru will enhance the Group’s ability to benefit from this positive fishmeal price trend.

"Looking ahead, the Group will continue to explore and seize acquisition opportunities. Pursuing this strategy will enable the Group to become a leading consolidator in the global fishing industry and a major supplier of fish products, especially to the expanding PRC consumer market," Mr. Ng concludes.