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Oceania Natural lifts annual profit

NZN 31/05/2016 Sophie Boot

Oceania Natural, the food supplements maker which listed on the NXT at the end of March, lifted annual profit as revenue more than doubled, although it missed its earnings guidance.

Net profit rose to $182,584 in the year ended March 31, from $1,154 a year earlier, while revenue more than doubled to $3.4 million, the Auckland-based company said in a statement.

The company produces food supplements derived from manuka honey and noni fruit juice.

The bulk of its revenue comes from China, where it generated $2.8m of sales in the latest year, earning $704,006 after costs.

The majority of its sales were generated in the second half, the company said, a sales cycle it believes will continue as Christmas, Gregorian New Year, Chinese New Year and Valentine's Day are popular in China, its key market.

"Our marketing strategy for the next 12 months is focused upon the Chinese market where strong growth opportunities exist across a number of sales channels," chairman Walker Zhong said. "The second half of the financial year is traditionally the busiest sales period, and a good portion of the first six months of 2017 will be focused on putting the systems and people in place that will allow for us to meet our (2017) sales target of $5.4 million."

Oceania Natural's direct sales channels delivered 20 per cent of its revenue, or $655,000, in 2016, and the company said it is looking to expand those channels, having set up shops on popular trading platforms WeChat, Taobao and Alibaba's TMall. When Oceania Natural listed, it predicted direct sales would increase to 26 per cent of revenue by 2017. The majority of the company's revenue was generated through its three regional distributors in China.

The company missed its listing forecast for normalised net profit of $700,000 to $900,000 because of "an unanticipated and incorrect forecast of costs adversely impacting upon our profit."

The shares last traded at $2.45, and have gained 125 per cent this year.

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