Tuesday 31 January 2017 12:36 PM
Oceania Natural third-quarter sales growth stalls on unstable grey market
By Paul McBeth
Jan. 31 (BusinessDesk) - Oceania Natural's third-quarter revenue stalled earlier growth as an unstable grey market in
China prompted the honey and noni juice products maker to rethink its distribution into the world's most populous
nation.
Total revenue was $327,000 in the three months ended Dec. 31, compared to $1 million in the second quarter, the
Auckland-based company said in its key operating metrics. The NXT-listed company last week scaled back its 2017 forecast
as discounted rival honey products undermined its sales into China through grey markets, and forced it to focus on
direct distribution channels.
Oceania Natural said sales were weighed on by the uncertainty over the definition of genuine manuka honey and an
upcoming science report will be watched by the industry and consumers alike, while changing Chinese regulations and the
rise of counterfeit manuka online meant it had to rely on slower distribution through direct channels.
Last week the company lowered its revenue target to $2.2 million for the year ending March 31 from $5.4 million. Sales
into China via distributors are expected to be $605,000, down from a previous forecast of $4 million, while Oceania's
direct sales are projected to be $1.6 million, up from $1.4 million. The forecasts make up Oceania's key operating
milestones (KOM) used on the NXT market instead of continuous disclosure requirements.
Today's third-quarter metrics show direct sales accounted for $138,000 of revenue in the period, while distributor sales
totalled $189,000. Gross margin was 38 percent in the period.
Oceania last traded at $1.94, down from $2.16 when it lowered its forecasts last week.
(BusinessDesk)