Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Global shrimp prices have improved after a prolonged period, encouraging higher stocking by shrimp farmers in India.
- Inventories in the US, a major market for shrimp, are clearing up, leading to improved demand.
- The European Union market remains robust, with an increased share in Apex's sales mix, indicating geographical diversification.
- Freight costs have been reducing, which is expected to positively impact profit margins.
- Apex is optimistic about future growth prospects, particularly with the potential approval of ready-to-eat products for the European Union market.
Negative Points
- Low demand and supply of shrimp affected overall shipments and profit margins.
- Higher raw material and freight costs have impacted profit margins.
- Ready-to-eat volume has decreased significantly due to loss of sales to certain retail customers in the United States.
- The company faces challenges due to countervailing duties and antidumping duties, which could impact costs and competitiveness.
- Shrimp volumes sold have decreased compared to the previous year, indicating supply challenges.
Q & A Highlights
Q: How has the shrimp supply from Ecuador to the USA been affected recently?
A: Shipments from Ecuador to the USA have reduced due to energy-related issues in Ecuador, including electricity failures impacting the farm, feed, and processing industries. This has led to a 17% reduction in imports from Ecuador to the USA compared to the previous year. - Karuturi Chowdary, CFO
Q: What is the current status of Apex Frozen Foods' ready-to-eat shrimp volumes?
A: The ready-to-eat volume has decreased to 10% in H1 FY25 from 20% last year, mainly due to a loss of sales to certain retail customers in the USA. This segment is primarily retail-focused, and the reduction in demand has impacted sales. - Karuturi Chowdary, CFO
Q: What factors are driving higher shrimp realizations in Q2 compared to Q1?
A: The liquidation of inventories and increased demand have led to higher buying prices from customers. This trend started in Q2 and continues into Q3, with a notable increase in realization prices due to improved demand across all markets. - Karuturi Chowdary, CFO
Q: What is the impact of countervailing and antidumping duties on Ecuadorian shrimp in the USA, and how does it compare to Indian shrimp?
A: Ecuador has been levied a countervailing duty of 3.78%, while India faces a countervailing duty of 5.77%, pending confirmation by the US ITC. The antidumping duty on Indian shrimp is 1.35%. These duties affect the landed cost and competitive positioning in the US market. - Karuturi Chowdary, CFO
Q: How have ocean freight rates changed over the past year, and what is the current trend?
A: Ocean freight rates peaked at $8,000 to $8,500 but have since decreased to around $5,000 to $5,500. This reduction is a positive trend for the company, as it helps normalize costs and improve margins. - Karuturi Chowdary, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
