SeaDragon set for big jump in earnings

HAMISH MCNICOL
Last updated 13:15 07/08/2014

Relevant offers

Industries

NZ Post boosted by Kiwibank Countdown result outshines Australian owner Woolworths NZ dollar still low as NZX 50, US dollar and Wall Street strengthen MYOB says it's competing 'strongly' with Xero Kiwibank makes $127 million profit Bid to attract migrant workers to Canterbury Vector says changing customer habits and driving innovation Power shopping can yield big savings for your electricity bill PrimePort Timaru profits jump to $3.9 million SkyCity prepares to jump final Auckland Convention Centre hurdle

Fish oil company SeaDragon's prospects have "increased significantly" in the past few months, a report from research firm Edison says.

The listed Nelson-based company said in June that it had secured a second major sales contract that would boost annual revenue to at least US$6 million ($7.08 million).

The company, Australasia's largest refiner and blender of fish oils, said the new deal would underpin its financial performance into 2016.

Edison today released a report on SeaDragon that said the company was set for rapid earnings growth.

SeaDragon said in March that it had signed a deal with Portuguese company Pescarias Cayon & Garcia LDA that would cover its raw-material supply for the next 12 to 18 months of squalene production.

The company raised $6.1m this year, of which $4m will be used to fund the development of a new Nelson plant able to produce more than 5000 tonnes of refined fish oil and generate annual sales worth up to $50m.

Edison said the new contracts, combined with greater certainty on the new plant, had increased its estimates for SeaDragon noticeably.

The contracts could be a "game changer" if executed properly.

"SeaDragon has a history of under-delivery on projections, due in no small part to the unpredictable nature of raw-material supplies," it said.

"The new ... supply contracts should eliminate most of this risk, although the fish still have to be caught and deliveries made to the company."

Chief executive Ross Keeley said recently that the two contracts would combine for sales of more than $7m for the year after October.

The name of the party involved and the terms of the second contract were confidential.

"This contract represents another significant win for SeaDragon and vindicates our decision to take bold steps to secure raw material for our squalene-processing factory," Keeley said.

For the year ending March 31, SeaDragon announced a profit of $431,000 on sales of about $3m.

Ad Feedback

- Stuff

Special offers

Featured Promotions

Sponsored Content