August 6, 2008

 

Clean Seas infuriates shareholders with about-turn on profit forecast

 
 

Clean Seas Tuna, the Australian aquaculture company famous for farming kingfish and tuna surprised shareholders last week with a profit downgrade that said the company could expect to lose US$1 million this quarter.

 

This was apparently contradictory to an announcement five weeks ago that its recent kingfish cultivation season had been the most successful yet, due to improved feeding techniques and better infrastructure. The company said better feed conversion meant that their fishes have gained weight faster, meaning they could be sold earlier.

 

The company appeared confident of a solid profit result, previously anticipated to be around US$2 million. The company also said it back then had no plans to raise more capital. 

 

The company says it is now anticipating a US$1 million loss due to the less than expected yellowtail kingfish growth for 2008.  Another reason was that average selling prices had declined due to the introduction of a frozen product range

 

Angry shareholders retorted that the slower growth and the price decline should have become known months ago through the company's various shareholders' updates. Yet, the information was not revealed until year-end.

 

Last week, the company announced that it was unlikely to have positive cash flows until it had a stable number of fish in the water. 

 

Meanwhile, the company's fish inventory is expected to rise for another 18 months at least due to recent acquisitions. The same acquisitions have also put the company into debt.

 

Even though it has made recent breakthroughs in aquaculture, especially pertaining to that of tuna breeding, questions about its long-term profitability are rising. 

 

The company was seen as a firm with huge potential given the huge competitive advantage it has over other aquaculture companies. The fish it breeds are exclusive to the rest of the market and the wild version is subject to fisheries restrictions.

 

Now its shareholders are left with the prospect of going without dividends for the next year and may even have to inject more cash to keep the company afloat.

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