The latest business update by Port Lincoln, South Australia, Australia-based yellowtail kingfish farmer Clean Seas indicates its year-to-date sales revenue is up 4 percent compared to 2019, but the impacts of COVID-19 hampered its results in the latest quarter.
The company’s Q3 FY2020 sales revenue is down 14 percent, largely as a result of the ongoing COVID-19 impacts. Clean Seas specializes in full-cycle breeding, production, and sale of yellowtail – a fish that is predominantly marketed to restaurants.
Sales volumes in both March and April showed decline. While year-to-date sales are positive, March saw sales volumes down 43 percent, while April saw an “effective shutdown in sales to Europe, North America, and Asia.”
“While Clean Seas was on track entering Q3 FY20 with growing sales and positive cash flow from operations, world-wide government lockdowns in response to COVID-19 have effectively closed in-restaurant dining in most markets globally,” the company wrote. “Clean Seas business model has historically focused on this channel which would otherwise be expected to result in a decline in revenues of circa 80 percent in April 2020, however this will be partly offset by an initial 116 [metric tons] (Whole Weight Equivalent) purchase by Hofseth North America.”
Norway-based Hofseth Group took a AUD 5 million (USD 3.2 million, EUR 2.9 million) equity investment in the company in early April.
Hofseth, according to Clean Seas, is assisting in converting the previously restaurant-focused channels to be compatible with the retail market.
“With support from the Hofseth Group, Clean Seas is in the process of finalising the design and planning for the purchase of processing and packaging equipment required to deliver in-house capability for new retail product formats,” Clean Seas wrote. “Clean Seas is also acquiring the accreditation certification necessary to produce retail products and expects to be operational and supplying retail products by Q2 FY21, either through in-house processing in its Adelaide facility or by using third-party contract processors in Australia or overseas.”
The company also saw positive results from legal action against Skretting, which was settled via mediation on 19 December, 2019, for a sum of AUD 15 million (USD 9.6 million, EUR 8.7 million). In total, the company, as of 20 March, has AUD 48.2 million (USD 31 million, EUR 28.2 million) in cash and undrawn facilities.
Currently, fish health “remains excellent,” the company said, with biomass weight up 18 percent to 4,853 metric tons.
The company added that its outlook, due to the uncertainties in the current marketplace due to COVID-19, “cannot give specific guidance at this time.”
“Clean Seas has undertaken a review of non-essential costs and available government stimulus measures, and is expecting to be able to reduce its cost base by in excess of AUD 5 million [USD 3.2 million, EUR 2.9 million] over the remainder of 2020,” the company wrote. “The company has the advantage of an exceptional product and has the balance sheet strength to implement changes and adopt new strategies to emerge from the unexpected market disruption of COVID-19 with a broader and more sustainable business model.”
