Clearwater: 'encouraging signs' of scallop TAC increase in 2018

'We won't be leaving any quota in the water this year.'

Despite strong scallop and clam sales, Canada-based Clearwater Seafoods saw its earnings before interest taxes depreciation and amortization (EBITDA) fall flat at the end of the second quarter compared to 2016 Q2, but it anticipates an improvement in the second half of the year.

Clam and scallop inventories were higher in the first half of 2017 versus the same period in 2016. Strong catch rates and larger sizes in the first half of the year led to higher sales.

"This time of year is peak harvesting time so debt will go down, EBITDA will go up so you get that nice lift there by the year's end. The biggest selling months of the year are September through December," the company said.

In the second quarter, Clearwater's scallop sales were CAD 54.2 million ($43.1 million/€36.3 million), up 25 percent from last year's Q2. 

This brings its scallop sales in the first half of the year to CAD 102.2 million($81.3 million/€68.4 million), up 24 percent compared to H1 2016. 

"We're at record prices for scallops. It's a big driver, about 25 percent of our year-on-year growth in revenue. 

"We're seeing strong quotas ... We won't be leaving any quota in the water this year. We will catch and sell everything this year other than inventory we want to hold."

Clearwater also is anticipating the sea scallop total allowable catch (TAC) may increase.

"We're hopeful for 2018 and have seen encouraging signs so far this year and believe that trend will continue ... We don't know the [landing] results, but indicators in the harvest we're experiencing this year would suggest there would be increases." 

After the end of the second quarter, the DFO announced an increase to the offshore Eastern Canada sea scallop TAC, indicating a healthy scallop population.

The company added there were tremendous catch rates. "In Georges Bank, catch rates were very strong for all players in the fishery and in fact, without the increase in quota, many would've been tying up boats early."

Despite this, the fishery management will use a cautionary approach in setting the interim TAC in 2018.

"Surveys will begin in a number of days this August and these surveys will be used to inform the interim TAC. We would not expect to see the Department of Fisheries to set a significant increase in the interim TAC. The final TAC depends on what we catch in the peak harvest season happening right now.

Europe

Europe is the company's largest scallop market and overall company sales to European countries in the first half of the year was CAD 112.7 million ($89.7 million/€75.5 million), up 11 percent, year-on-year. 

In the second quarter, it was CAD $56.9 million ($45.3 million/€38.1 million), up 7 percent from last year's second quarter.

Clams

Clams also drove revenue growth as prices are good, but our mix is more smaller-sized clams due to mother nature."

Clearwater said it expects continued double-digit growth in clam sales with improving margins and significant reductions in clam inventory.

In the second quarter, Clearwater's clam sales were CAD 25.1 million ($20 million/€16.8 million), up 38 percent from last year's Q2. This brings its scallop sales in the first half of the year to CAD 48.6 million ($38.7 million/€32.5 million), up 32 percent compared to H1 2016.

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