High Liner Foods CEO announces “organisational realignment” after lower than expected sales

News
1395

Soft sales volume, raw material cost increases, and inefficiencies in their supply chain dampened the Canadian seafood giant’s earnings this last quarter.

Rod Hepponstall, the newly-installed President and CEO of High Liner Foods, a processor and marketer of value-added frozen seafood, said in its last quarterly report :”The impact of these challenges in the second quarter was most acute in our U.S. business.”

EBITDA decreased by $1.4 million (EUR 1,2 million) to $12.0 million (EUR 10,5 million) compared to last quarters $13.4 million (EUR 11.8 million).

Sales increased by $12.9 million (EUR 11,3 million) to $245.3 million (EUR 215,6 million) compared to $232.4 million (EUR 204,3 million).

However lower sales volume associated with a product recall in 2017 that swallowed sales by $8.6 million (EUR 7,5 million) and gross profit by $8.6 million (EUR 7,5 million) in the second quarter of 2017.

Yesterday, the Board of Directors of the Company approved a quarterly dividend of CAD $0.145 per share on the Company’s common shares payable on September 15, 2018 to holders of record on September 1, 2018.

Rod Hepponstall took over the position from current chairman and CEO Henry Demone in April.

Looking ahead ahead Rod Hepponstall said:

“Organizational priorities for the next 12 to 18 months are focused on creating a more efficient company and improving performance. Specifically, the North American structure will be completed in 2018 and while there will be costs incurred this year related to this activity, it is too early to quantify these.

“We expect this optimized structure will result in a minimum of $10 million in annualized cost savings, on a run rate basis, starting in 2019. However, there are other areas of the business where additional investment will be required to ensure we have the right expertise, processes and tools required to capitalize on market opportunities.

“These will be determined as part of business objectives focused on profitable organic growth, business simplification, supply chain excellence, and integrating and growing the Rubicon business that was acquired in 2017. We will also work to mitigate the impact of higher raw material and supply chain costs through these initiatives,” he added.

Regarding the Trump administration’s taxes on China, the company said “that it would will continue to monitor these developments closely, particularly as further information becomes available on what products could be impacted by these proposed tariffs and how these proposed tariffs would be implemented.”