US tax brought wild 2018 start for Canada’s seafood sellers

William Stoichevski

They might have started 2018 poorly, but after the first week of trading in Toronto, major Canadian seafood companies have seen volatility along with large gains in their stock prices.

Bedford-based clam harvester Clearwater saw shares dip on January 2nd to CAD 7.24 before the stock rose and hovered at CAD 7.32 prior to rocketing on the first Friday of 2018 to CAD 7.78. It came down to finish its rally at CAD 7.70.

Processor and retailer of frozen-only seafood, High Liner Foods, has also seen volatility in its share price since New Year’s Day, with its first Friday peak reaching 15.20 from 14.68 as 2018 opened. The company orders no Atlantic salmon from Eastern Canada because that “salmon is primarily sold as fresh and High Liner is a frozen seafood company.” This procurer of frozen salmon from elsewhere, however, had no real answer for the wild start to the new year.

“I don’t have a ‘Why’ for you,” High Liner Foods VP of investor relations and corporate performance told SalmonBusiness.

“In terms of High Liner Foods, I would suggest our current stock price is more a function of recent internal challenges versus external,” she said, adding, “In terms of the recent U.S. tax changes, I would think if anything this would be potentially beneficial for seafood companies with operations in the US and a positive for them, not a negative.”

Tax changes approved by the Republican-lead Congress at Christmas cut the corporate income tax rate to 21 percent from 35 percent. RBC Capital Markets has said tax reductions for Canadian-based companies doing much of their business in the U.S. “could lead to a significant shift in winners and losers” with huge gains made on the Toronto Stock Exchange.

Tax blur
Major salmon buyer, Premium Brands Holdings, saw its share price soar from a low of 100.96 on January 2nd to a high of 104.36 on January 3rd. A giant North American distributor of seafood, Premium saw its wild salmon supplies thwarted by a bad harvest in the third-quarter of 2017, when it said it would be looking at other more stable sources of salmon.

RBC, however, cautioned that for companies like Premium, with major U.S. and Canadian operations, that the U.S. effective tax rate is actually lower than the new corporate tax rate. Still, the combined provincial-federal Canadian tax rate of 26.7 federal-state rate was much lower than the 39.1 percent state-Federal average which the assent of the U.S. Tax Cuts and Jobs Act has changed to 26 percent.


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