SeaDragon first-half sales rise 17% as supply security beefs up production

SeaDragon [NZX: SEA], which manufactures fish oil for health supplements, boosted first-half sales 17 percent after securing supply of raw material to help bolster production, and has building consents for its new refining plant worth $7.5 million.

Revenue rose to $2.45 million in the six months ended Sept. 30 from $2.08 million a year earlier, the Nelson-based company said in a statement. Sales in September made up the majority, bringing in $1.06 million, a record monthly income for the company. Earlier this year the company secured supply of new raw material for its squalene production.

SeaDragon now has consents to building its new refined fish oil factory, splitting the cost with its landlord and hopes to complete it by June next year as it looks to diversify away from squalene production into higher value Omega-3 fish oils. The plant will be able to process in excess of 5,000 tonnes of the fish oils from hoki, tuna and salmon, enabling it to grow its share of the US$30 billion market for fortified foods and drinks. It expects the new factory to contribute to earnings from the second half of the 2016 financial year.

"New raw material supply agreements secured earlier this year enhance the likelihood of this performance continuing into the second half of the year and into the future," chief executive Ross Keeley said. "We believe our refined fish oils can attract a premium over the anchovy-based oils, which dominate the industry globally, due to international confidence in SeaDragon's food manufacturing capabilities and New Zealand's clean-green image."

In January SeaDragon raised $4.1 million in a share sale to existing investors, exceeding its $2.5 million target. The funds, combined with $2.5 million from the sale of a stake in Snakk Media and $2 million from a share placement, were to be used for working capital, debt payment and funding the new plant.

Shares of SeaDragon rose 5 percent to 2.1 cents, and have gained 5.3 percent since the start of the year.

(BusinessDesk)