Angel Seafood posts record September quarter revenues despite lockdown restrictions

Organic and sustainable pacific oyster producer Angel Seafood (ASX: AS1) has posted record September quarter revenues despite a string of trading challenges brought on by COVID-19 lockdowns.

The company posted a $2.1 million return, representing a 5% increase on the previous corresponding period and amid pandemic restrictions affecting markets in New South Wales, Victoria and the Australian Capital Territory.

Units sold for the quarter held steady in line with a record of 2.7 million in the previous corresponding period, while an increase in the average unit price resulted in a new revenue record.

The average price per unit increased by up to $0.80 compared to $0.75 per unit in the previous corresponding period and was driven by an improvement in the sales mix, while underlying prices remained resilient despite lockdowns in major markets.

Stock remained healthy with biomass increasing to 496 tonnes (or 94% on the previous period), leaving the company well placed to provide a continuous supply of stock for the Christmas-New Year peak sales period.

Angel also recommenced oyster exports during the quarter, making up approximately 5% of sales for the quarter.

Exports were in small quantities due to challenging freight costs; however, it allowed the company to maintain relationships with export customers during the lockdowns.

Record results

Angel chief executive officer and founder Zac Halman attributed the record September results to improved stock profiles, minimised mortality rates and the sale of oysters into growing channels at improved prices.

“We hold a very strong stock position as we move into the fourth quarter, giving us sufficient supply on hand to be deployed for the peak season and to service the increasingly growing retail channel as much of the economy re-opens,” he said.

“Trading conditions for the month of September in particular, showed promising signs of a resurgence in oyster demand ahead of the festive and summer season, as our sales increased 66% when compared to August.”

Three-pillar strategy

As part of a three-pillar strategy for its next phase of growth, Angel has launched several initiatives to improve efficiencies and pricing.

Mr Halman said flip farm trials in Coffin Bay and Cowell (along South Australia’s remote Eyre Peninsula) are progressing well and there are promising signs of “superior product quality” to meet the preferences of growing retail demand.

Once the trials are complete, integration of the flip farms into the company’s normal operations will further increase production capacity while lowering average production costs.

A summer oyster trial is also performing well and produce is on track for sale early in the new year.

Mr Halman said the stock experienced a “small amount of mortality” through winter in line with expectations and remaining stock levels are healthy.

The success of summer oysters will extend Angel’s sales season from 10 months to a full calendar year including across key festive periods such as Chinese New Year and Valentine’s Day.

Annual sales are expected to increase by up to 15% with no further investment in assets.

Money matters

Cash receipts from customers during the September quarter totalled $1.8 million, which was down slightly on the $1.9 million recorded in the previous corresponding period.

The strong resurgence of sales towards the end of the quarter resulted in some cash receipts falling into the December reporting period.

Total operating cash outflow was $175,000 and comprised spat purchases (including investments in net biological stock growth for future sales growth), production costs, advertising and marketing, payments for leased assets, staff costs, and administration and corporate costs.

Payments to related parties amounted to $182,000 and mainly consisted of key management personnel salaries and director fees.

Angel remains well funded with liquidity of $3 million.