The directors of seafood processor High Liner Foods Inc. announced Monday that former chairman Henry Demone will take back his CEO role following disappointing sales and a prolonged recall of breaded food products.

Keith Decker, who was brought in as CEO in 2015, will leave the company. The change is effective immediately.

The company, based in Nova Scotia, has a large processing facility in Portsmouth, New Hampshire. High Liner Foods is one of two surviving whitefish processors on the East Coast.

In its earnings report, also released Monday, the company showed a decrease in quarterly gross profits from $46.7 million in the second quarter of 2016 to $37.8 million this year. Net income decreased by $4.5 million over the same period. The company reported gross sales of $508.1 million for the first half of 2017 compared with $515.8 million for the same period in 2016.

“The board and I are confident that the company is pursuing the right strategy to grow our business and create long-term shareholder value,” said Demone in a company statement. “As CEO, I am looking forward to working more closely with the High Liner Foods leadership team on the execution of this strategy and on pursuing our growth opportunities.”

Demone was CEO of the publicly traded company from 1992 to 2015, and led it through a series of acquisitions, including Fishery Products International in 2007, Viking Seafoods in 2010, Icelandic Groups US and Asian operations in 2011, American Pride Seafoods in 2013, Atlantic Trading Co., in 2014, and Rubicon Resources in 2017. Last year, High Liner reported sales of $956 million.

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In 2016, it sold its scallop business and the New Bedford (Massachusetts) American Pride plant to Blue Harvest Fisheries.

In its second quarter report, the company highlighted a costly recall that began with an undeclared milk allergen for seafood products sold in Canada. That recall cost the company $700,000. Its ingredient supplier then told High Liner there was undeclared milk in other formulations, which led to a widespread recall of breaded products in both the U.S. and Canada. The recall resulted in estimated losses of $9.7 million for the first half of 2017.

Additionally, the sale of the New Bedford scallop business in September 2016 had the impact of lowering sales volume by 1.5 million pounds and sales by $19.8 million during the first half of 2017 compared to the same period last year.

The acquisition of Rubicon in May increased sales volume by 3.3 million pounds and sales by $17.7 million in a comparison of second-quarter earnings.

Company officials noted that the transfer of processing from its New Bedford plant to Portsmouth encountered problems just as it was gearing up for the busiest time of the year for seafood sales – Lent.

“Excluding the impact of these items and the recall, sales volume for the the first half of 2017 decreased by 3.2 million pounds, reflecting residual manufacturing challenges associated with production transferred from our previously owned New Bedford facility,” said the company’s earnings report. Those factors resulted in an inability to meet heightened demand in March related to a late Lent, and the continued impact of lower demand for traditional breaded and battered frozen seafood products. Sales were also depressed by product returns, limited product availability and customer shortages as a result of the recall, it said.

High Liner Foods officials expect the drop in sales will be temporary. Recovery from the recall and sales related to the acquisition of Rubicon are expected to strengthen finances through the end of the year.

“Having returned to year-over-year organic sales volume growth, we believe continued improvement in our manufacturing operations will return the company to year-over-year earnings growth in the third and fourth quarter of 2017,” concluded Demone in the earnings report.


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