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Icelandic shores up at home as it looks to U.S. Add to ...

High Liner Foods Inc. remains keen to eventually scoop up the U.S. operations of rival frozen seafood producer Icelandic Group, but right now it has more pressing business in shoring up its traditional line of products.

The acquisition of the Icelandic assets - the No. 1 provider of value-added frozen seafood to the U.S. food-service sector - would be a big boost to Lunenburg, N.S.-based High Liner as it seeks to expand south of the border. An offer by High Liner in January was rebuffed.

Icelandic's U.S. and Chinese operations are being sold in a fully open auction, but there is little detail to provide at this early stage in the bidding process, High Liner president and chief executive officer Henry Demone said on a conference call Wednesday.

For now, High Liner is working on finding ways to offset the negative effect of the sharp rise in the price of fish, particularly salmon, over the past several months, he said.

Consumers have been reluctant to pay higher prices for its core line of products, such as its popular frozen salmon fillet, he said.

"Some of the good old products that are there day in, day out and that pay the bills slipped in late 2010 in part because of the price increases," he said.

"We need to stabilize the volume in some of our traditional products. We've seen some slippage there. If we stabilize that, we're confident in our ability to grow the business with product innovation," he said.

The trick is to find the right mix of cost-cutting measures, such as cheaper packaging, and advertising and promotions aimed at winning over consumers, High Liner chief financial officer Kelly Nelson said in an interview after the call.

"It really comes down to being a little more aggressive in maintaining our margins through cost controls rather than more price increases," he said.

High Liner also faced more aggressive promotions last year from Lachine, Que.-based rival BlueWater Seafoods, Mr. Demone said.

On the other hand, new and more innovative product lines - such as Pan-Sear Selects - are doing very well, he added.

High Liner made an unsolicited $445-million offer in January for all of privately-held Icelandic but was rejected.

Earlier this month, after the collapse of an agreement to sell Icelandic to a European private equity firm, a decision was made to sell only the U.S. and Chinese assets in an open and transparent auction.

High Liner, which sells to both the retail and food service segments, does about 55 per cent of its business in the United States but wants to increase that share as consolidation in the global frozen-seafood sector continues.

The company solidified its U.S. presence late last year with the $31.5-million (U.S.) acquisition of Massachusetts-based Viking Seafoods Inc.

High Liner reported on Tuesday fourth-quarter profit of $2-million or 13 cents a share, down from $3.8-million or 21 cents in the year-earlier period.

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