Aquaculture company Seafarms Group (ASX: SFG) is gaining traction in its prawn export business, particularly in Europe, but the overall performance of the Company continues to struggle as it battles financial issues following an adverse Federal Court ruling in February 2024.
In it’s FY24 results for the year ended 30 June 2024, the Company reported a 75% increase in Black Tiger prawn export sales for the calendar year 2024, driven by strong demand from European markets such as France, Spain, and the United Kingdom. Despite this, the Group’s overall financial performance remained in the red.
Seafarms posted a loss after tax of $19.6 million, up from a $15.4 million loss the previous year. This was largely attributed to ongoing investment in Project Sea Dragon, a large-scale prawn farming project that has yet to materialise after the Federal Court ruled it insolvent, which is being appealed by Seafarms.
“The past year has seen significant progress in our efforts to expand globally, particularly in Europe where our export volumes surged,” said Seafarms CEO, Peter Fraser.
“However, we remain focused on resolving the challenges tied to Project Sea Dragon and other operational issues.”
The European market has emerged as a promising revenue stream for Seafarms, with France being the top buyer of its Black Tiger prawns. The Company has positioned its Crystal Bay Prawns brand as a premium offering, gaining recognition in both domestic and international markets. In Australia, the Group’s “Go-to Freshness” campaign saw domestic sales of Banana prawns increase by 15% during the second half of 2024.
However, the prawn farming sector continues to face challenges that weigh on Seafarms’ broader business. Inflationary pressures have driven up input costs for feed, electricity, and labour, squeezing profit margins in an already competitive market. Domestically, the company was hit by subdued retail demand for premium prawns as cost-conscious consumers shifted to cheaper protein alternatives.
Operationally, Seafarms’ Queensland facilities reported mixed results. The Banana prawn crop performed well, particularly during key seasons such as Christmas, but climatic conditions negatively affected Black Tiger prawn production. Overall production for the year was down, with a total of 1,118 metric tonnes of prawns produced, compared to 1,260 tonnes in 2023.
Adding to the strain is a legal dispute with Canstruct, a construction firm involved in the development of Project Sea Dragon. This dispute has clouded the future of the project, which is seen as pivotal to Seafarms’ long-term growth and reasoning for Seafarm’s court appeal.
Looking forward, Seafarms plans to finalise the sale of two prawn farms by April 2025. The sale is expected to release capital, which will be reinvested into Project Sea Dragon. Meanwhile, the Group continues to explore new revenue opportunities, including a breeding programme that provides genetically improved prawns to other Australian farms.
Emily Maxwell is a business writer at The Sentiment with interest in the tech, fintech and retail industries.
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