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Great catch

Sea Harvest expanded its fleet with a new vessel - Harvest Atlantic Peace - for R130m. Sea Harvest expanded its fleet with a new vessel - Harvest Atlantic Peace - for R130m.

One can be forgiven for getting too excited when the big hake catchers make a big profit splash. That’s because the hake industry in the past decade-and-a-half has certainly not been characterised by uneven catches and periods where operating performance was stranded on the rocks.

But recent results from both consumer brands giant AVI – which owns I&J – and empowerment group Brimstone Investment Corporation – which controls Sea Harvest – showed profit lines have tightened encouragingly.

Sea Harvest reported catches 18% higher in the year to end December 2014 compared with the same period in 2013. This was mainly due to better vessel utilisation and increased catch rates.

Sea Harvest also saw strong local and international sales driven by firm demand for hake. Then the company was also fortunate to score from the weaker exchange rate – which helped revenue increase 10% and gross profits increased almost 35% to R198m. Operating profits (before interest and tax) jumped by over 50% to R109m.

Brimstone was also able to increase its dividend haul. A refinancing arrangement put in place in March last year led to a significant saving in finance costs, and Brimstone – which has backed Sea Harvest since the late nineties - received a whopping R59m in preference share dividends and redemptions.

It seems Brimstone is confident Sea Harvest will continue to land strong catches with the company expanding its fleet with acquisition of a new vessel, Harvest Atlantic Peace, for R130m.

I&J, which specialises mainly in catching and selling frozen hake, appears to be delivering a hefty profit catch for AVI, which has invested substantially in the past financial year. AVI's recent trading update for the six months to end December showed that I&J generated a 20% increase in revenue to R982m.

The improved performance at I&J justifies AVI’s decision to invest R108m in a new deep sea fishing trawler and a used freezer factory ship. These are both expected to be ready to take to sea at the start of 2016 financial year. I&J also invested in a second deep sea trawler, which will be used until the end of May this year.

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