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- Oyster farmer Angel Seafood (AS1) has joined the list of companies scrapping guidances for 2020
- The company is classed as an essential service and as such, oyster farming is tracking along as per normal
- However, with restaurants shutting their doors and people stockpiling non-perishable goods, oyster sales are not particularly glowing
- Angel has made the call to withdraw its sales guidance given the current economic uncertainty
- Shares in Angel dipped five per cent in the red today, closing worth 9.5 cents each
Oyster farmer Angel Seafood (AS1) might be classed as an essential service, but it’s not immune to COVID-19 side effects.
Angel Seafood has joined the growing list of companies scrapping their 2020 earnings guidance as the coronavirus panic throws doubt across the future of sales.
Farming fine, sales uncertain
While Angel’s farming operations have been unaffected by both the COVID-19 pandemic and government regulations in response to the virus, it seems oysters are not on the priority list for toilet-paper-crazed panic buyers.
Angel is a primary producer of oysters in Australia, and as such has not had to shut its doors in the face of coronavirus quarantines. The company said it has staff working from home where possible and has suspended all non-essential travel, but the oyster farming itself is tracking along as per normal.
However, with restaurants now shutting their doors across the country and foot traffic in food markets being reduced, key areas of Angel’s market are under siege.
Further, the company was planning on starting up a new export sales program in the near future, but travel bans have put this plan on halt.
While oysters are still on sale in retail markets, sales for the quarter are currently at 80 per cent of what the company was expecting. As such, given the uncertainty of the current market, Angel has made the call to scrap its sales guidance for the 2020 financial year.
A hidden gem
A silver lining during a time of tough sales is Angel’s fresh opportunity to improve its stock profile by farming some larger oysters.
With softened demand, the company said it has a chance to grow the oysters for longer before harvesting. The large oysters should attract higher prices once demand returns to normal.
The company has increased its warehouse capacity to allow for excess stock to keep growing in size before being farmed.
Angel CEO and Founder Zac Halman said as for the Angel team, the company will keep monitoring the COVID-19 situation and respond as required to keep employees safe.
“We remain completely focused on best positioning Angel for the long term. We are seeing larger oyster sizes becoming available for sale, which we expect to continue selling,” Zac said.
“We remain confident that once consumer demand returns to normal levels and access to export markets re-opens, Angel will be well-positioned for a return to growth,” he said.
Nevertheless, shares in Angel Seafood sunk five per cent lower on the back of today’s news. When the ASX closed, shares were worth an all-time-low 9.5 cents each.
