Frankfurt am Main, 21. May 2014

  • Revenue decreased compared to a strong Q1 2013
  • Higher profit margins on all levels
  • Solid financial development forecasted for 2014

Frankfurt am Main, May 21, 2014 - Despite the still on-going difficult market environment in the first quarter 2014 affecting the results of Chinese seafood processors, Haikui Seafood succeeded in increasing its profit margins and further strengthening the Group's financial position.

The continuing stiff competition and tight supply of raw materials as well as the extended inspection time by the Chinese Inspection and Quarantine Authorities (CIQ) on export-bound products had a negative impact on the results of Haikui Seafood in the first quarter of 2014. Revenue declined by 28.7 per cent to 30.2 million Euros (Q1 2013: 42.4 million Euros). Measured in the local currency RMB, revenue decreased by 27.9 per cent year-on-year. Regarding the revenue decline in Q1 2014, it has to be taken into account that the first quarter of 2013 was a very strong quarter as the large supplies of raw seafood in the second half of 2012 and at the beginning of 2013 enabled Haikui Seafood to meet sales deliveries in Q1 2013. Moreover, the Q1 2013 results were not affected by the CIQ's measures.

In the first three months of 2014, frozen products, Haikui Seafood's major product segment accounting for 81.6 per cent of total revenue (Q1 2013: 90.3 per cent) recorded a decline in sales of 35.6 per cent. However, revenue for canned seafood products, the second product segment, increased by 35.7 per cent year-on-year and accounted for 18.4 per cent of total revenue (Q1 2013: 9.7 per cent) in the first quarter of 2014.

Increased profitability on all levels and comfortable financial position
Despite the weaker revenue compared to the previous year, Haikui Seafood was able to improve its profitability by selling larger quantities of abalone products and by increasing the selling prices for both abalone and squid products. As a result, the gross profit margin in the first quarter of 2014 went up to 21.4 per cent (Q1 2013: 19.9 per cent). The EBIT margin increased to 17.0 per cent (Q1 2013: 16.1 per cent) and the net profit margin improved to 13.7 per cent (Q1 2013: 11.6 per cent).

Haikui Seafood's financial position remained very strong with cash and cash equivalents of 54.4 million Euros (December 31, 2013: 49.8 million Euros) and an equity ratio of 96.9 per cent as of March 31, 2014 (December 31, 2013: 97.4 per cent).

Solid financial development expected for 2014
Even though the challenging market environment will continue in 2014, Haikui Seafood is convinced of its ability to better cope with these adverse external factors than in 2013. "One of our operational measures to deal with the challenging environment, in particular to combat the margin compression, is to sell larger quantities of higher value-added, higher margin products whenever possible. And of course we'll continue to follow our growth strategy, which mainly comprises of geographical and capacity expansion", states Chen Zhenkui, CEO of Haikui Seafood.

To position the Group for further growth, Haikui Seafood will begin the construction of its new production facility on Dongshan Island in 2014. The new factory will be equipped with advanced machinery to automate and streamline certain processing steps and is expected to enhance Haikui Seafood's current production capacity and efficiency. The construction start is planned for the third quarter of 2014. Completion would take about 1.5 years with contributions from the new facility foreseen for 2016.

Regarding the financial development of the company in 2014, the on-going competitive environment amidst a weak global economy and the more stringent inspections by CIQ of the end product quality of Chinese seafood exporters have to be considered. On this basis and mainly due to an exceptionally weak fourth quarter 2013, the management of Haikui Seafood anticipates a year-on-year increase in revenue by at least 5 to 10 per cent in RMB terms and an EBIT margin in the range between 11 and 13 per cent. With respect to the half-year results, H1 2014 revenue is expected to be lower compared to H1 2013 with the growth in the top-line expected to be recorded sometime in H2 2014. Margins for H1 2014 are expected to be slightly lower than Q1 2014 but higher than H1 2013.

The full first quarterly report 2014 of Haikui Seafood AG is available on the website 
www.haikui-seafood.com.



About Haikui Seafood AG
Haikui Seafood processes fish and seafood for the Chinese and international markets. Its products range includes frozen or canned fish and seafood, produced from a large variety of species of raw fish and seafood, including prawn, crab, various fish species and shellfish as well as cephalopods. Clients of Haikui Seafood are distributors in China and overseas, located mainly in Asia, the U.S. and Europe. Haikui Seafood employs 663 permanent employees and 937 additional temporary workers as of March 31, 2014. The company has an annual processing capacity of more than 34,000 tonnes (output). The processing facilities are located in the South-East of China on Dongshan Island, Zhangzhou, Fujian Province. Haikui Seafood operates a streamlined supply chain including self-owned processing facilities, in-house research and product development capacities as well as warehousing and cold storage facilities while simultaneously cooperating closely with raw goods suppliers.

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