Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clean Seas Seafood Ltd (CTUNF, Financial) has successfully completed an operational review, resulting in a right-sized business with sales and production in equilibrium.
- The company maintained resilient fresh pricing at $22.93 per kilo for FY24, slightly higher than FY23, indicating strong market positioning.
- Feed prices have declined from their peak, and current orders are placed at FY23 price levels, which should positively impact future profitability.
- The consolidation of farming operations onto a single site has reduced operational complexity and costs, enhancing efficiency.
- The introduction of the automated feed barge, Eyre Spirit, is expected to significantly reduce production costs and improve operational stability.
Negative Points
- Operating profit declined from $1.21 per kilo in FY23 to negative $1.61 per kilo in FY24, primarily due to high feed prices and clearance of frozen inventory.
- Revenue fell slightly to $68.8 million despite higher volumes, impacted by lower frozen prices and increased freight costs.
- The company reported an operating EBITDA loss of $5.1 million, reflecting challenges in managing costs and market conditions.
- Net debt increased by $10.1 million over FY24, leading to a gearing ratio of 24%, which may impact financial flexibility.
- The European market proved challenging with increased competition and cost of living impacts, leading to aggressive discounting of frozen stock.
Q & A Highlights
Q: Can you elaborate on the impact of feed prices on your financial results and future expectations?
A: Robert Gratton, CEO: Feed prices significantly impacted our FY24 results, with costs peaking at $3.80 per kilo in March. This increase reduced our net profit by $1.31 per kilo. However, prices have since declined to FY23 levels, and we expect further reductions, which should positively impact our financials in FY25.
Q: What are the key outcomes of the operational review, and how have they affected the business?
A: Robert Gratton, CEO: The operational review led to a 25% reduction in employee and contractor numbers, consolidation of farming operations, and a significant decrease in frozen inventory. These changes have improved cash flows and reduced fish husbandry expenses by $5.3 million compared to FY23.
Q: How has the consolidation of your farming footprint improved operational efficiency?
A: Robert Gratton, CEO: By consolidating our farming sites to a 25-kilometer radius around Port Lincoln, we've reduced operational complexity and costs. This allows us to manage all activities with a single set of resources, improving efficiency and reducing infrastructure requirements.
Q: Can you discuss the financial outlook for Clean Seas in FY25?
A: David Di Blasio, CFO: We expect sales volumes between 2,600 to 2,800 tonnes, with improved pricing due to the elimination of frozen clearance sales. The operational efficiencies and reduced feed costs should lead to stronger cash flows and profitability.
Q: What role will automation play in your future operations?
A: Robert Gratton, CEO: The new automated feed barge, Eyre Spirit, will allow us to feed remotely, reducing costs and improving feed conversion ratios. This automation will cover 90% of our productive capacity, enhancing operational stability and efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
