GCIOcean Harvest shares gain on 65% revenue growth and record customer pipeline
(), a producer of animal feed supplements from seaweed blends, released a trading update for the 6 months to 30 June 2023 (H1 23), reporting a 65% year-on-year increase in product revenue to €1.6m, compared to €0.95m in the first half of 2022. The revenue growth resulted from new customer acquisitions, volume growth from existing customers, and an increase in average selling prices.
Gross margins in the period the were significantly higher than 2022, largely due to the elimination of selling concessions which Ocean Harvest had offered customers in prior years to offset high shipping costs induced by Covid-19.
Ocean Harvest sold to over 40 customers in the half, an increase of around 30 customers over 2022. Among the new customers are one of the largest UK animal feed companies and a top 5 swine producer in the US.
As reported last month, Ocean Harvest's recently completed feed trial results have demonstrated the efficacy of its OceanFeed line of products in improving animal performance across a range of species.
Markets reacted well to the positive trading update, pushing shares 8.3% higher. The company will publish its final results for the 6 months ended 30 June 2023 in September 2023.
In summary, the substantial revenue growth recorded in H1 23 validates last month's positive feed trial results that affirmed the value of Ocean Harvest's animal feed product. The company's proprietary seaweed blends have shown a substantial improvement in production economics, and in an environmentally sustainable manner.
The revenue growth can be attributed to significant investments in sales and marketing, and improved margin efficiencies following a post-Covid reduction in shipping costs. Further revenue growth is expected as the company's customer trial pipeline continues to grow, with trials in progress or scheduled with over 20 potential new customers. As trading in the half was significantly ahead of the prior year, Ocean Harvest is confident in meeting market consensus for 2023 while maintaining strong sales visibility for H2 2023.
After raising £6m in its IPO 3 months ago in April, Ocean Harvest has remained focused on research & development, alongside sales and marketing to continue driving growth. Its supply chain has expanded, sourcing suppliers in new and existing markets for each of its seaweed species. The company recently entered an arrangement with a supplier of brown seaweed, which has guaranteed its supply at attractive pricing for at least the next two years.
In related news, () announced a two-year agreement with Springtide Seaweed, one of the largest organic kelp farms in North America, to form a joint venture to develop carbon sequestration and removal services through sustainable kelp farming. Springtide Seaweed is the largest USDA Organic certified seaweed farm in Maine, cultivating multiple species. shares moved 3.7% higher on the news.
The European seaweed market is expanding, because of a growing demand for alternative and sustainable proteins along with a growing demand for products with nutritional benefits. The consumption and popularity of seaweed are growing, especially in many coastal countries, which already have some familiarity with the product.
On a global scale, the commercial seaweed market is projected to grow from US$15.01bn in 2021 to US$24.92bn in 2028 at a CAGR of 7.51%, making it one of the most promising products in the seafood industry, and with a range of applications far beyond that including biopharma and biofuels.
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