High Liner Foods reported on November 7 that third quarter sales were $216.5 million, down from $219.9 million rung up during the same period in 2012. The value-added seafood production and marketing company’s adjusted net income was $10.4 million during Q3, an increase of $2.4 million over the same time frame in 2012. Profitability improved despite continued pressure on sales in certain sectors, and operating cash flow was strong.
“Consistent with the first half of this year, in the third quarter we experienced sales declines compared to last year in our US foodservice business and our US and Canadian retail private label businesses,” said CEO Henry Demone. “The decline in US foodservice sales reflected continued soft restaurant sales related to a sluggish economic recovery, and the decline in retail private label sales reflects the trend being experienced in the seafood marketplace overall of decreased demand for retail private label seafood products.”
However, the impact of these sales declines was partially offset by sales growth in the company’s retail business on both sides of the border, and in the Canadian foodservice business, when compared to the same period last year.
“The $2.4 million increase in adjusted net income in the third quarter also reflects lower overall raw material costs, significant savings in financing costs resulting from amendments made to our term loan in the first quarter of this year, realization of synergies resulting from integrating the Icelandic USA acquisition, and a lower effective income tax rate,” said the chief executive officer. “In the first quarter of this year, we expedited the closure of our plant in Danvers, Massachusetts, and as a result, incurred incremental operating costs related to reduced plant throughput rates as our US plants integrated new products into their respective production facilities.
“The extent of these incremental costs, incurred in part to ensure minimal disruption to our customers, was not fully anticipated,” he continued. “And while we have been successful in increasing plant throughput rates from those experienced in the first quarter, these rates have not been fully restored to optimal levels.”
As a result the company continued to incur additional operating costs in the third quarter related to the reduced throughput rates, and the full impact of the synergies related to closing the Danvers factory have not yet been fully realized. Maximizing throughput rates and reducing operating costs associated with the US manufacturing facilities is currently a top priority.
