28 Jul 2017, 08:35AM | MKTUPDTE
BUSINESS UPDATE for the period 1 April 2017 to 30 June 2017 – Quarter 1, FY2018
Commentary:
AUCKLAND, New Zealand, 28 July 2017 - The Board of Oceania Natural (NXT: ONL) is pleased to announce the quarterly performance of the business to 30 June 2017 compared to the company’s Key Operating Milestone (KOM) targets.
The board remains confident in achieving its FY 2018 sales target of $2.780m. The demand for ONL products continues to build through the investment in building our presence in China.
Total Revenue
Revenue for the first quarter was $123k an increase over the Q1FY17 revenue of $51k.
The Board does not envisage any change in the sales patterns as ONL’s sales revenue tends to increase in the second half of the financial year due to Christmas, Gregorian New Year, Chinese New Year and Valentine’s Day falling within this period. The Board will continue to closely monitor the Company’s performance against the KOM targets and will advise the market if any restatement is required.
New Zealand Sales
Growth in New Zealand local sales has been primarily through stronger online sales with sales for the first quarter being $72k.
Overseas Sales
Export sales have primarily been for new products being marketed within China by Oceania Natural Wuxi Limited and once they are accepted, sales volumes are expected to increase for these products. There have been no large volume sales during the first quarter to ONL’s independent distributors. Overseas sales for the first quarter were $51k.
Gross margin:
First quarter margin was 24%, and slightly above the KOM target. This was largely due to sales of our Noni juice products.
Beyond China: Update on other markets
There have been repeat orders from Japan during the quarter. The ONL team is looking to assist in the promotion of these products to increase sales within export markets. “Rich Garden” branded Manuka honey and Noni juice products continue to grow within New Zealand.
Manuka Bonds
Manuka Bonds issued during the quarter ended 30 June 2017 totalled $146k. Manuka Bonds have provided ONL with the ability to invest in modest amounts of bulk raw material inventory to protect ONL from variation in supply such as that reported by competitors, and the New Zealand apiculture industry. Should pricing increase due to a shortage of supply, then bond holders could benefit from an increase in the valuation of the Manuka Honey inventory at maturity of the Manuka Bonds as outlined in the Manuka Bond subscription agreement.
Outlook
The second quarter will focus on converting sales opportunities of the new and existing product range by the Wuxi sales team. ONL’s CEO will be travelling to China in August looking to formalise sales agreements with new partners and where possible enter into supply arrangements for product.
Performance against Key Operating Milestones:
Key Operating Milestone (“KOM”) Q1 FY18 Full Year FY17
Targets
1 - Total Revenue ($’000) $123 $2,780
2 – New Zealand Sales ($’000) $72 $376
3 – Overseas Sales ($’000) $51 $2,404
4 – Gross Margin Percentage 24.0% 22.0%
KOM Calculations:
Total Revenue ($000)
ONL is primarily a food and beverage company selling a range of products into the domestic and export markets. These products include a range of honey products, Noni juice, natural product dietary supplements as well as a small range of cosmetics under the Labella brand. ONL has key investments, relationships and distribution agreements in place that will drive its revenue growth through the sale of these products. ONL is also working on a number of strategic initiatives to increase both New Zealand and export revenues.
A combination of existing products, with those in the product development pipeline, will result in ONL enjoying increasing demand through the expansion of the Rich Garden and Pacific Natural product range in China.
The revenue projections made in the KOMs are in New Zealand dollars and will fluctuate depending on currency movements of the New Zealand dollar exchange rate against the currencies where the products are sold.
New Zealand Sales ($000)
New Zealand channels for sales include:
• Online sales through various websites offering the products; and
• Local resellers based in New Zealand.
Overseas Sales ($000)
Overseas Sales represent all export sales from New Zealand to foreign customers. All transfers to ONL overseas entities are not recorded as sales until they are on-sold to third party customers in the respective markets. Numerous sales channels are used, and are supported by marketing within China managed by Oceania Natural Wuxi Limited. ONL continues to work with various distributors to increase revenues in foreign markets. Forecast exchange rate used for sales targets in China are converted to NZD/CNY 1:0.20.
‘Gross Margin’ Expressed as a percentage.
Expressed as a percentage, the Gross Margin represents the percentage of total revenue that the ONL group obtains from the products sold, less the direct costs associated with producing the goods sold (COGS), divided by the total revenue. Inventory adjustments and valuation adjustments are not included in this Gross Margin calculation. Growing Gross Margin allows ONL to invest in other business supporting activities, such as marketing, expanding into new markets, and investing in new business opportunities.
It is calculated as follows:
Gross Margin % = [Total Group Revenue (less) COGS] / Total Group Revenue
Future Events:
Event Date
Half Year Balance Date & 2nd Quarter end 30 September 2017
2nd Quarter business Update Due 30 October 2017
Half Year Preliminary Result Due 30 November 2017
ENDS
Authority for this announcement
Name of senior manager or director
authorised to make this announcement: Malcolm Lindeque
Contact phone number: 021 464 392
Contact email address: Malcolm@onlgroup.co.nz
Date of release: 28 July 2017
Oceania Natural Limited’s shares can be traded on the NXT Market. Oceania Natural Limited is required to disclose information under the NXT Market Rules. Information about the NXT Market and Oceania Natural is available here www.nxt.co.nz or from the company’s website at www.onlgroup.co.nz
For media enquiries please contact:
Julie Landry, Connect PR, julie@connectpr.co.nz or 021 895 098.
About Oceania Natural Ltd
Oceania Natural (ONL) produces and distributes healthy, high quality food and beverage products derived from natural food ingredients, including New Zealand Manuka honey as well as Noni fruit sourced from the Cook Islands. More than 80% of the company’s sales are generated from exports, predominantly to China, where ONL has a subsidiary company and an established network of distributors marketing its products under its “Rich Garden” and “Pacific Natural” brands. The company also sells direct from its websites and through several popular online trading platforms in China including TMall, WeChat and Alibaba. See www.onlgroup.co.nz
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