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Thursday 21 October 2021

SeaDragon pivot drives push into ingredients, functional foods, packaging

20th September 2021 By Staff Reporter | | @foodtickernz

Omega fish oils refiner SeaDragon says new food ingredients and white label products are about to launch following its pivot to higher-value sales.

SeaDragon has partnered with Hawkins Watts. Image: SeaDragon

In his address to shareholders at the company’s annual meeting on Thursday, chief operating officer Dr Nevin Amos said he was confident the move up the value chain would attract more New Zealand food business customers.

“To grow the profitability of the business, as was outlined last year, we have been investing in higher-value food ingredients and in white‐labelled consumer products. These products have been progressed to where they are close to launch,” Amos said. 

“In the food ingredient area, we have partnered with a world‐class manufacturer of encapsulated‐DHA (docosahexanoic acid, an omega‐3 fatty acid) infant nutrition powder. This partnership will enable us to offer DHA powder containing SeaDragon refined oil to companies that dry‐blend DHA powder into their infant formula.”

SeaDragon had also developed its own powder for inclusion in functional foods.

“This powder is coming to the end of its extended stability testing and we are currently seeing good results from those. We have also undertaken tests on inclusion of our developed powders in foods and these have performed well,” Amos said.

“We are confident of New Zealand food businesses including our powders in their products and have one company doing so as a range extension next month.” 

Amos added that the company had partnered with one of New Zealand and Australia’s leading food ingredient suppliers, Hawkins Watts.

“Hawkins Watts has a very strong relationship with the food industry within New Zealand, Australia and the Pacific Islands. We expect this relationship will drive sales of our ingredients to the food industry.”

The progress came despite a challenging environment, which saw the company grappling with freight issues.

“Raw material shipments that we would normally expect to take six weeks have been taking up to 24 weeks. This has caused disruption for our operations and has made it difficult to deliver to customers within their requested delivery times,” Amos said.

“On our key import and export routes, the freight component has increased in some cases by 300%‐400%. We will be factoring in those costs in future price discussions with our customers.”

SeaDragon was also planning to manufacture “a novel packaging solution” for other brands to deliver omega-3.

“Our delivery mechanism provides the dose in a liquid format that has good mouth feel and taste, thus avoiding having to take and digest gelatine capsules with no efficacy or benefit,” Amos said.

“We are currently working with several launch customers for this format and expect to have this product launched within the Australian and New Zealand markets over the next six months.”

Executive chairman Bryan Mogridge said SeaDragon’s profitability improved over the past two years thanks to “efforts of the team to downsize, focus on enhanced efficiencies and generate new product directions”.

“Unfortunately, we are still in loss territory with the EBITDA loss of 5.2m in FY19 reducing to an EBITDA loss of $2.3m last year with a forecast reducing this further to a loss of $1.9m at the EBITDA level in this financial year. 

“As we have mentioned previously, we anticipate getting some monthly positive EBITDA results during calendar 2022 and achieving regular profits in the year following.”

In its results for the year to 31 March 2021, it narrowed its previous full year after-tax loss from $7m to $3.13m.

The company said it would give notice to shareholders holding less than $1000 worth of shares that they had three months to increase their holding to $1000 or greater, “failing which SeaDragon may arrange for the sale of their shares”.

Around 2800 shareholders out of about 3300 would be affected.



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