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SeaDragon [NZX: SEA], which manufactures fish oil for health supplements, expects to more than double annual sales as two squalene contracts worth US$6 million boost revenue in the second half.
The Nelson-based company's two contracts to supply squalene, an oil refined from shark's liver, will bring combined gross sales to US$6 million for the year starting Oct. 1, and chief executive Ross Keeley told BusinessDesk he expected revenue to more than double this year as the contracts kicked in from the second-half of this year and overlap into the first-half of the 2016 financial year. SeaDragon reported annual sales of $3.1 million for the year ended March 31, with a profit of $431,000.
Earlier this year the company secured supply of new raw material for its squalene production. SeaDragon has been investing in a new factory as it seeks to diversify from its current production of squalene and shark liver oil products and ramp up production of higher value Omega-3 fish oils from hoki, tuna and salmon, enabling it to grow its share of the US$30 billion market for fortified foods and drinks.
"Given that these sales contracts do not utilise all of the raw material contracted to be supplied to SeaDragon, considerable upside exists in terms of both volume and sales value for the balance of the finished product that will be produced," Keeley said in a statement. "We are now very well positioned for the current financial year and beyond and are looking forward to 2015 when the completion of our new oil refinery plant in Nelson will allow a major expansion in our range of Omega-3 fish oil products."
In January SeaDragon raised $4.1 million in a share sale to existing investors, exceeding its $2.5 million target. The funds, combined with $2.5 million from the sale of a stake in Snakk Media and $2 million from a share placement, were to be used for working capital, debt payment and funding the new plant.