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Oceania Natural on track to lift sales

NZ NewswireNZ Newswire 31/10/2016 Jonathan Underhill

Oceania Natural, the food supplements maker which listed on the NXT at the end of March, said it was on track to lift revenue by 58 per cent this year as it tests new markets outside of China.

Its full-year revenue target is $5.4 million, up from $3.4 million last year.

Sales were about $1 million in the second quarter, mainly from its key market of China, from $51,000 in the first quarter. Its gross margin narrowed to 43 per cent from 56 per cent and was on track to slip to 40 per cent for the full year.

"The quarter was marked by laying further groundwork in China, which includes preparing for growth to accommodate larger sales volume through channels now controlled by the business," Oceania (ONL) said in its business update.

Explaining the smaller gross margin, ONL said its current pricing expectations "have been lowered given the current discounting of honey products in China by ONL's competitors. This will adversely impact gross margins if retail pricing remains at current levels."

Part of ONL's strategy is to establish a presence in China, which it has done with ONL Wuxi, with the opening in Wuxi City of what is going to be the company's headquarters for Asia in September.

In its update, Oceania said it is negotiating an agreement with Chinese insurer Property and Casualty Co which will control and produce the labelling on ONL products sold in China that will include a protected QR code that will make it harder for its manuka honey products to be faked.

The bulk of Oceania's revenue of food supplements derived from manuka honey and noni fruit juice come via its direct sales, amounting to $880,000 in the latest quarter, including $545,000 from ONL Wuxi.

In the quarter, the company sent trial shipments to Taiwan and Japan and expects to make its first shipment to South Korea this month.

The shares last traded unchanged at $2.65 and have climbed 143 per cent in the past 12 months.

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