Clean Seas Seafood Limited, a Royal Park, South Australia, Australia-based producer of yellowtail kingfish, is bidding David Head, its CEO of almost five years, farewell as it continues to struggle amid through the global COVID-19 pandemic.
Head, who initially announced plans to retire in August, has come to an agreement with Clean Seas to accelerate the process. On 14 September, he officially stepped down from his role as director, but will remain in the company’s employ until its annual general meeting in October.
Clean Seas Chairman Terry O’Brien said the mutual decision to hasten Head’s retirement was made because “the transition to a strategy which is less reliant on branding and high-end trade is not where [Head’s] skills nor his passion lie.”
“David deserves a great deal of kudos for what he has built over his five years at Clean Seas and we wish him well in whatever he chooses to undertake,” O’Brien said.
Robert Gratton, Clean Seas chief financial officer, will assume the role of acting CEO while Head’s departure is finalized, with group financial controller David Brown taking over the position of acting CFO, while also continuing to serve as company secretary.
“Both gentlemen have performed outstandingly in their roles to date and we know they will manage this step up in responsibilities admirably,” O’Brien said.
In an effort to reduce the cost of their salaries, O’Brien said Clean Seas recently eliminated two senior executive positions. O’Brien said the company “had to face the fact that the ‘new normal’…requires a leaner and more agile structure.”
“There has been and continues to be a focus on reducing or eliminating expenses that no longer align with the company’s future strategies. The most recent annual forecast suggests a reduction in the vicinity of AUD 5 million [USD 3.5 million, EUR 3.1 million] of such costs annually. These costs were appropriate for the strategic setting of the business before COVID, but not so now,” O’Brien said.
The COVID-19 pandemic has dealt several blows to Clean Seas in FY2020, with the company reporting a loss after tax of AUD 14.5 million (USD 10.6 million, EUR 8.9 million) for the year. In 2019, the firm reported a profit after tax of AUD 1.5 million (USD 1.1 million, EUR 925,256). Additionally, underlying operating earnings before interest, tax, depreciation, and amortization (EBITDA) turned a loss of AUD 7.2 million (USD 5.3 million, EUR 4.4 million).
“The worldwide government lockdowns in response to COVID‑19 effectively closed in‑restaurant dining in most markets globally from the latter part of Q3 FY20 and during most of Q4 FY20,” the company said in its annual report.
In the report, the company said it was making moves to reduce the cost of doing business across the entire company's portfolio.
“When in‑restaurant dining closed worldwide in late Q3 FY20, Clean Seas sales declined to around 20 percent of prior year. In Australia, and in response, the company focused on growing sales in non‑restaurant channels (historically less than 20 percent of sales) particularly with smaller (one- to two-kilogram) fish through seafood retailers and small supermarkets. This initiative helped improve sales in Australia to 49 percent of prior year in May, and with restaurants starting to re‑open in June (albeit at limited capacity) sales returned to 105 percent of prior year,” the company said.
Moving forward, Clean Seas is looking to keep up with the development of new retail products, which it aims to launch during the second quarter of fiscal year 2021. O’Brien said “the future is expected to involve greater volumes of our wonderful yellowtail kingfish being sold to a broad and diverse set of sales channels and global markets.”
The company noted that discussions with Norwegian seafood producer, processor, and distributor Hofseth Group have been progressing. Earlier this year, Hofseth made a sizeable investment in Clean Seas, committing to help the company diversify its selling channels, particularly in China and the U.S.
“Clean Seas remains confident that Hofseth can assist the company in identifying new sales opportunities, although potential distribution arrangements are yet to be finalized,” it said.
