High Liner reports big earnings decrease in Q2
Cites lower margins and exchange rate, but sales revenue is up
LUNENBURG, NS — Stock in High Liner Foods Inc. fell almost 9% Aug. 12 after the Nova Scotia-based value-added frozen seafood company reported a big decrease in second-quarter earnings despite a strong increase in sales revenue.
High Liner, which reports in US currency, cited lower margins in Canada and an unfavourable change in the exchange rate among factors that saw net income fall 47.5% to US$5.2 million or 17 cents per diluted share from US$9.9 million or 32 cents in the comparable 2013 quarter.
Adjusted income was US$7.5 million or 24 cents per share, down from US$9.2 million or 30 cents in the prior-year period.
Sales revenue increased 14.9% to US$235.5 million from US$204.9 million.
“Raw material costs in our Canadian business have increased in 2014, in part due to a weaker Canadian dollar, and have not been fully recovered through price increases to our customers,” CEO Henry Demone said in a statement.
Demone added that many of High Liner’s major customers in the US food service industry were continuing to experience soft sales, “creating a challenging environment for this part of our business.”
In addition, the company faced higher financing costs resulting as a result of higher average debt levels and less favourable changes in the valuation of an embedded derivative and interest rate swaps as well as US$1.6-million increase in stock-based compensation expense.
© 2014 The Canadian Press