Abagold out of the red

Abagold out of the red

AQUACULTURE business Abagold, which specialises in farmed abalone, now looks fully recovered from a devastating red tide event that smacked the Hermanus-based operations in 2017.

In its latest annual report for the year ended June, Abagold reported abalone tonnage sold increased by 14% to 505 tons (2020: 444 tons) despite a market constrained by the effects of the Covid-19 pandemic.

What’s more the average abalone selling price improved to R380/kg (2020: R360/kg), with a significant recovery in the second half of the year  due to the sale of larger abalone.

Abalone revenue improved by 26% to R202 million with CEO Tim Hedges reporting a more balanced and improved sales mix across the pipeline. Even more encouraging is that gross profit was increased by 35% to R140 million with the gross margin fattening markedly to 54% (51% in 2020). Hedges said the improved margin stemmed from an improved harvest performance with a reduction in third-party abalone purchases.

Overall Abagold produced 7.2 million spat (abalone cultures) for the year, which meant the group was able to meet its own production requirement.

Hedges said the balanced pipeline now reflected a full recovery from the 2017 red tide event – indicating that the farm delivered growth of 473 tons with an average abalone size of 136g at the end of the reporting period.

Looking ahead to financial 2022, Hedges said Abagold’s Seaview, Sulamanzi, Amaza and Bergsig production systems were now full, with abalone maturing as per plan.

This, he said, would allow Abagold to have access to larger-size product to harvest – adding that the growth rates were in line with expectations. “Any risk of overstocking will be corrected through the sorting and harvest plan.”

Hedges also pointed out that management had introduced several innovations – like improved technology in tank cleaning, Radio Frequency Identification Tags on baskets and automated sorting systems. These have already reduced costs and improved efficiency across all the farming units.

Hedges said challenging the market conditions through traditional channels and markets, especially in Hong Kong, would prompt further innovation from the sales and marketing team.

But overall Hedges was bullish for 2022. “The improved offerings from the mature pipeline and the expected recovery of base canned and live abalone demand in our markets, together with good momentum in new and developing markets, have given the team the comfort that demand will improve further in the first half of 2022. This will allow the business to maintain the momentum achieved into the year ahead.”

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