Lunenburg, Nova Scotia, Canada-based High Liner Foods posted higher profits and earnings in Q2 2024 compared to the same period of 2023, but its sales volume decreased in part due to headwinds in its foodservice business.
The company posted a gross profit of USD 52.5 million (EUR 48.1 million) in the quarter, up USD 500,000 (EUR 458,000) from the USD 52 million (EUR 47.6 million) it posted in Q2 2023. Gross profit as a percentage of sales also increased to 24 percent, up from 20.4 percent. The company’s EBITDA also increased, rising to USD 23.8 million (EUR 21.8 million) – up USD 1.8 million (EUR 1.6 million), or 8.2 percent, compared to the USD 22 million (EUR 20.1 million) it posted in Q2 2023.
Sales, however, decreased in both volume and value terms for the quarter. The company sold 51.7 million pounds of product in Q2 2024, down 7.7 million pounds, or 13 percent, from the 59.4 million pounds High Liner sold in Q2 2023. Sales value decreased by an even higher percentage, dropping to USD 218.3 million (EUR 200 million) – down USD 36 million (EUR 33 million), or 14.2 percent, from USD 254.3 million (EUR 232.9 million).
High Liner Foods President and CEO Paul Jewer said the positive profit and earnings came as the company continued to find efficiencies in the business as the company faced headwinds from a difficult consumer environment.
“We continue to operate in a dynamic market in which market data shows that despite easing inflation, the consumer continues to feel stretched and pull back on discretionary spending, such as dining outside of the home, and remains price sensitive in the grocery store,” Jewer said during a conference call covering the company’s Q2 results. “We are seeing these trends play out as the foodservice traffic slowdown in Q2 lead to an overall category decline.”
The frozen seafood category in retail has also remained relatively stagnant, and there were year-over-year declines in volume for High Liner, Jewer said.
“Against this backdrop, we're focused on leveraging the opportunities associated with our value and premium offerings and using the diversity of our business to lean into areas of greatest stability and opportunity in terms of species, channel, or customer,” Jewer said.
Despite the overall negative trend in both foodservice and retail, some of High Liner’s products saw great successes during the quarter. High Liner Foods Chief Commercial Officer Anthony Rasetta said that the company has continued to drive momentum on its premium products in U.S. retail, which has boosted High Liner Foods’ market share.
“This was driven by the robust performance and expanded distribution of our Sea Cuisine and C. Wirthy premium products, as well as our new branded value-added shrimp SKUs,” he said. “We saw a particularly strong performance in our C. Wirthy premium Atlantic salmon brand, which was the fastest-growing value-added brand in frozen seafood in the U.S. during the second quarter.”
Not all of the volume declines were related to headwinds in foodservice and retail. Jewer said that roughly 60 percent of the company’s volume decline comes from the cessation of contract manufacturing – a move that the company made in Q1 2024 to move away from lower-margin operations.
“As market dynamics change and you see increases in raw material prices and if you conclude that you’re not able to pass those on or there’s a decline in the volume anyway – so the scale of the business doesn’t support the benefit that you would get from plant absorption – those are the types of things that factor into our decision about what volume we want to continue to do at what price,” Jewer said.
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