Clearwater crab product. (Photo: Clearwater)
Clearwater recorded higher sales in 2017 but lower EBITDA
Thursday, March 08, 2018, 02:20 (GMT + 9)
Clearwater experienced improvements in sales for both the year and the fourth quarter of 2017, representing growth rates of 1.5 per cent and 5.5 per cent, respectively, as compared to the same periods in 2016, but the EBITDA was lower.
For the whole 2017, sales reached CAD 621 million and the adjusted EBITDA was CAD 108.6 million, compared to CAD 611.6 million and CAD 120.9 million in 2016, respectively.
The fourth quarter's earnings in 2017 reveal sales for CAD 174.8 million and an adjusted EBITDA of CAD 28.5 million compared to CAD 165.7 million and CAD 29.5 million in the same period last year.
The firm stated that the lower total allowable catch (TAC) for coldwater shrimp and soft market conditions for langoustines and king scallops were offset by volume increases in clams, sea scallops and Argentine scallops.
For the year, foreign exchange rates were unfavorable as the Canadian dollar strengthened against the US dollar, GBP and the Yen negatively impacting sales and gross margin by CAD 12.0 million for all currencies. This unfavourable foreign exchange impact was partially offset by Clearwater’s foreign exchange hedging program, which contributed CAD 3.1 million of realized gains within adjusted EBITDA.
Clearwater recalled that on February 21, 2018 the DFO announced that Five Nations Clam Company is the recipient of a licence to harvest 25 per cent of the TAC for Arctic surf clams to be effective January 1, 2018. Clearwater had agreed to be the operational partner with thirteen Mi’kmaq bands from Nova Scotia in their proposal for the licence which was not successful.
That measure was not welcomed by Clearwater's managers, who pointed out that the firm had purchased its licences and quota with the consent of the Department of Fisheries and Oceans Canada (DFO) and has invested hundreds of millions of dollars to develop this fishery and the market, including USD 156 million in the last three years. In this decision to expropriate investment value and undermine the good faith capital investment decisions of the private sector, the Minister has destabilized the investment climate in the Canadian fisheries and the Canadian natural resource sector.
“In 2018, we will be making necessary adjustments to our clam business to protect the hundreds of remaining jobs in the fishery and long-term shareholder value while we continue to pursue our legal options,” the firm’s managers pointed out.
For 2018, the firm expects modest TAC reductions in clam and the announcement of a new entrant, potential TAC reductions in scallops, competitive market pressure associated with an anticipated significant increase in US scallop supply and foreign exchange headwinds are expected to offset progress in volume, pricing and margin on other core species.