Thanks to record sales, Gulf of Spencer horse mackerel producer Clean Seas Seafood is poised to return to profitability after losing more than $45 million in the previous two years.
Revenue for the public company for the 12 months ended June 30 was $66.2 million, a 37% increase over FY21 and a 64% increase in revenue from $40 million in FY20.
Sales volumes also reached a record 3,757 tonnes at an average price of US$17.61 per kilogram, while production costs fell by 19% to around US$12.40 per kg.
"What we're seeing is a continuation of very strong business performance," Clean Seas CEO Rob Grattan told InDaily after the company's fourth-quarter results were released on Friday.
"Fish continues to do very well in all of the new markets and channels that we have entered and the demand is far greater than anything we have seen before and that is key to sales.
"The other side is optimizing our working capital, balancing our inventories and managing our production costs. These two things working together support cash flow and business performance."
While export is a priority for the company, a highlight was the growth of Australian sales to 2,153 tonnes in FY22. European sales also rebounded strongly to 1,237 tonnes after falling in the previous two years due to disruptions related to COVID-19.
Australia's growth was fueled in part by the nationwide launch of a range of retail products featuring Woolworths.
A secondary listing last year on Euronext Growth Oslo (OSE), the main exchange for high-growth fisheries companies, also appears to be helping Clean Seas' European performance.
Grattan said that while Thazard was historically viewed as a raw sashimi appetizer in high-end restaurants, it's now also gained a reputation as a very good main course that was cooked with larger portions, which had helped drive consumer sales to boost.
"It cooks very well fresh and frozen and some of that diversification in Australia has been market and channel driven, but it has also been usage driven and that has led to an increase in volumes," he said.
"The challenge for us from COVID has been restaurant closures and also supply chain disruptions.
"Our new business was mostly delivered in the belly by planes for export, so with restaurants closed and no international flights it was certainly a big hit to our business, but before the pandemic we were at around 2,500 tonnes a year and the year that we just finished, we're almost at 3,800 tons.
"Getting out of COVID has helped, but it's really the diversification of the business and greater scale that has allowed us to grow and reduce production costs."
Clean Seas reported a loss of $14.45 million in fiscal 2020 and a loss of $32 million last year.
But with a positive cash flow of $5.5 million in FY22, the company appears to be on the cusp of notable change.
While it's too early to say whether record sales and positive cash flow will translate into a return to profit when earnings are released in the coming weeks, Gratton said the company is "definitely on track."
"Our goal was to be cash flow positive and earnings positive by FY23, so to be cash flow positive a year earlier than expected is great," he said.
Robert Gratton, Managing Director of Clean Seas Seafood. Photo: Provided.
"It's a very big change from last year and the year before that, and if you look even deeper, it's unprecedented for this company to be so cash flow positive."
The Adelaide-based company has also completed the stocking of juvenile mackerel at its new Fitzgerald Bay site near Whyalla, a key part of its plan to double its production potential to 10,000 tonnes per year.
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Fitzgerald Bay Farm is expected to be Clean Seas' largest site with a capacity of more than 4,000 tons of Yellowtail.
Clean Seas is based at its Royal Park processing facility, Arno Bay hatchery and Spencer Gulf hatcheries in Port Lincoln, Arno Bay and Fitzgerald Bay in the Eyre Peninsula.
The company's share price rose 9% after Friday's announcement that it would close the week at $0.55.
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