Special Report: Angel Seafood has achieved record quarterly sales in a challenging trading environment

South Australian oyster purveyor Angel Seafood (ASX:AS1) has delivered a record quarter of sales despite unprecedented trading conditions.

Angel sold 2.1 million oysters, up 5 per cent on the prior corresponding period, recording full-year sales of 6.6 million oysters, up 25 per cent on FY19.

The record result comes after Angel Seafood made a decision to fast-track its retail strategy in light of the restaurant closures during the COVID-19 pandemic.

Feedback from retailers has been overwhelmingly positive and there is also growing recognition that Angel can guarantee continuous supply of good quality stock to their stores.

Currently, less than 20 per cent of major retail stores sell oysters and there is a significant opportunity to increase this further, representing a substantial growth opportunity for Angel.

The growth in oyster sales drove a record quarterly revenue result of $1.7m, up 4 per cent on the prior corresponding period, and a record full-year revenue result of $5m, up 16 per cent on FY19.

The result reflects the underlying growth in the business through increased water holdings and Angel’s strong stock profile.

 

Improving stock profile

Subdued restaurant sales enabled Angel to focus on further improving its stock profile towards larger sizes, which are higher value and preferred by the restaurant channel and for exports.

With the aid of favourable growing conditions Angel was able to increase the biomass of its oysters by 34 per cent during the quarter, with 42 per cent of its oysters classified as the larger ‘plate’ or ‘standard’ size.

Angel also recommenced export sales over the last quarter, successfully shipping oysters to its existing clients in Hong Kong.

While volumes have been small due to COVID-19 restrictions, as well as interrupted economic conditions in Hong Kong, Angel continues to see this as a long-term opportunity and with an improved stock profile, the company will be well placed to capture opportunity as demand returns to normal levels.

The company continues to focus on building relationships with several prospective clients in the region.

 

Hitting another major milestone

Despite the challenging operating conditions, Angel has managed to hit another major milestone, achieving positive operating cash flow in its recent results.

Angel generated positive operating cash flows of $462,000 during the quarter, and $405,000 for FY20. The milestone means that Angel’s core operating business activities are producing cash that can be used to focus on accelerating and executing the company’s strategy.

“We are extremely pleased with the results seen this quarter and how the business has been performing in challenging operating and trading conditions,” chief executive officer Zac Halman said.

“Our sales numbers were driven up by strong growth in the domestic retail markets. Towards the end of the quarter we also saw some early signs of recovery in restaurant demand too.”

“Following a period of significant investment in increasing our water holdings, improving our infrastructure and strengthening our stock profile, we are now in a really strong position to deliver substantial future growth.

“Demand for our clean, green, premium oysters continues to be strong, and pricing remains stable, which positions us well in the domestic market, and to grow in export markets.

“As restrictions ease further and consumers return to dining out, we hope to see demand increase across our channels.”

Angel will continue to focus on selling its oysters to existing customers, further penetrating the retail channel and, as restrictions around the world ease, exploring further opportunities in the export market.

This article was developed in collaboration with Angel Seafoods, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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