In This Article:
Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Apex Frozen Foods Ltd (NSE:APEX) recorded a 73% year-over-year sales growth in Q3 FY25 and a 42% growth over nine months, indicating strong market performance.
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The company's sales mix in the European Union market increased significantly to 45% in Q3 FY25 from 36% in Q3 FY24, showcasing successful market diversification.
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Average realization prices grew by 13% year-over-year and 8% quarter-on-quarter in Q3 FY25, reflecting improved pricing power.
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The company achieved a record Q3 revenue of INR 231 crores, marking a 16% increase quarter-on-quarter and a 56% increase year-on-year.
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Apex Frozen Foods Ltd (NSE:APEX) is optimistic about future growth due to signs of inventory liquidation in overseas markets and a reduction in major ocean freight costs.
Negative Points
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The company faced constraints in raw material supply due to low farm gate pricing, impacting overall production and supply.
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Gross margins decreased to 25% in Q3 FY25 from higher levels previously, primarily due to increased raw material costs.
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The average purchase cost of raw materials increased by 21% year-over-year and 15% quarter-on-quarter, affecting profitability.
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Despite easing global sea transportation issues, domestic raw material prices remained firm, impacting profitability.
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The company's shrimp volumes sold in nine months of FY25 were lower compared to the same period in FY24, indicating supply challenges.
Q & A Highlights
Q: What is the impact of the reduction in basic custom duty for frozen fish paste and fish hydro on Apex Frozen Foods? A: Unidentified_3 (Managing Director and CFO): The reduction in basic custom duty does not directly benefit Apex Frozen Foods as the company sources raw materials domestically and focuses primarily on shrimp processing rather than importing these products.
Q: Given the increase in realization, why is there a disconnect in margins, and can we expect margins to revert to previous levels? A: Unidentified_3 (Managing Director and CFO): The margin impact is due to supply constraints and conservative approaches by farmers. However, as supply improves and raw material prices stabilize, we expect margins to improve. The current situation is better than six to nine months ago, and we anticipate further improvements.
Q: How is Apex Frozen Foods addressing the impact of increased shrimp prices and import duties? A: Unidentified_3 (Managing Director and CFO): While there is some impact from duties, the company is diversifying its market exposure, particularly increasing sales to the EU to mitigate the impact of duties in the US market. This diversification strategy helps balance the business environment.