SeaDragon misses annual earnings guidance, refinery costs rise to $10.6 mln

Tuesday 26th April 2016

SeaDragon missed its annual earnings guidance as a downturn in sales pushed down prices of Omega-2 oil and says the final cost of its Omega-3 refinery will be more than previously expected.

Earnings before interest, tax, depreciation and amortisation in the 12 months ended March 31 were "lower than previously indicated to the market," the Nelson-based fish oil refiner said in a statement. SeaDragon, which had previously forecast annual earnings of $144,000, will publish its audited results next month.

"The Omega-2 market has proved to be challenging in the last few months of the financial year, with SeaDragon experiencing an extension in the sales cycle due to what we believe is a short-term softening in demand which has resulted in downward pressure on prices," the company said. "As a result, Omega-2 inventory levels are higher than usual at year end, resulting in reduced cash reserves."

At the same time, SeaDragon said it will finalise the cost of its Omega-3 refinery when it announces its annual earnings. The company increased the likely cost to $10.6 million from a previous estimate of $9.15 million to $9.55 million, subject to negotiation with suppliers and the capitalisation some expense items.

The ballooning cost of SeaDragon's refinery prompted the company to raise $10 million after the project was delayed and went over budget. That capital raise introduced NZX-listed health products firm Comvita as a cornerstone investor in SeaDragon.

The company said it's still searching for a new chief executive after Ross Keeley's departure last year, and interim boss Rich Alderton will continue in that role.

The shares were unchanged at 1.4 cents, the same level they started the year at.

BusinessDesk.co.nz

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