Fishy business: China Fishery’s net profit drops 2% to US $46 million

The fish processor was hit by a closure of the Peruvian fishing grounds and the delayed delivery of fish roe to Japan.

The company also blamed higher vessel operating costs and general operational underperformance from the three business segments, CFG had results well below their expectations.

In the second quarter of financial year 2011, CFG’s core earnings accounted for 21% of their estimates for the year, which was significantly lower than the usual 40-47%. Their net profit came in at US$46m (-2% YoY, +132% QoQ).

Following their lowered South Pacific/Mauritania catch volume and margin assumptions, CFG cut their net profit forecasts for FY 2011 by 29% and for FY 2012 by 32%. From S$2.18, they also reduced their target price to S$1.77.

And though North Pacific’s revenue is up by 16% year-on-year, it still has a delayed delivery of fish roe to Japan. On the other hand, Peru fishmeal operations drastically dropped by 54% year-on-year due to the lower sales volume, which was brought about by temporary closure of the fishing grounds.

However, despite this drop in figures, CFG looks forward to a stronger second half. Delayed fish roe sales which are due next quarter will benefit the North Pacific, while Peru fishmeal sees improved situations with the reopening of the fishing ground in April 11. South Pacific catch is expected to be better on its fishing season from March to November.

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