FISHING company Sea Harvest – which for generations has profited from mainly its large hake business – took a massive plunge when it acquired the Ladismith Cheese business for R527 million in 2018.
Some observers contended seafood and dairy would not mix into a tasty profit recipe. They have, so far, been proved wrong.
And judging from the latest annual statements from Sea Harvest, further diversification into non-seafood niches are a distinct possibility. The report reiterates that the acquisition of Ladismith Cheese, a value-added dairy operation, was a further step in the execution of the Group’s stated investment strategy of growing through acquisitions in complementary sectors of the South African food and agricultural industry which exhibit strong fundamentals and growth, and where the group is able to leverage its core competencies and strengths.
While it’s almost impossible to predict where Sea Harvest might hunt for new acquisitions, it is heartening to know that Ladismith – which initially attracted some scepticism in the investment community, is doing swimmingly.
In Sea Harvest’s recent report to end December 2020, the Cape Harvest Foods segment – which houses Ladismith as well as Sea Harvest’s factory shops – fared well thanks to increased in-home consumption during the Covid-19 lockdowns.
Revenue for the segment was up 3% to R1.02 billion with operating profit down to 2% to R94 million (but this was after accounting for R2 million of Covid-19-related expenses).
After tax profit from Cape Harvest Foods came in at R68 million – which is roughly the same as the previous year’s figure. Considering that around R136 million in bottom line profits has been generated by Cape Harvest Foods, the price tag of R527 million for Ladismith is starting to look like a bargain deal.
Hopefully the next tilt away from the seafood core is equally fruitful for Sea Harvest.