Atlas South Sea Pearls expects to record a half-yearly profit of $2 million on the back of a general downturn in demand for luxury goods, offset by cost savings implemented by the Subiaco-based company.
The announcemetn is below:
A preliminary estimate of the company's half yearly profit before tax is $2.04M (2008 - $6,064,240) from sales revenue of $3.08M (2008 - $7,456,587). The profit includes a foreign exchange gain of $1.542M, a loss resulting from movements in the value of agriculture assets of $198K, non-operating income of $545K and interest expense of $48K.
The operating result reflects the current state of the pearl market and the general downturn in demand for luxury goods as a result of the global recession. Pearl prices are approximately 40% below 1H 2008 levels with sales volume reduced by 60%. However, as a result of reductions in operating costs and realised savings from improvements in efficiencies in pearl farms operations, the company remains profitable in this environment.
Operational targets through June 2009 such as the number of oysters seeded and the quantity of oysters on hand have been achieved.
The company successfully raised $2.9M in April through a rights issue which was over-subscribed. The cash position of the group remains strong as a result of expenditure cuts. No further debt has been incurred in 2009 and the company continues to show a strong balance sheet.
The outlook for the pearl market remains uncertain for the remainder of 2009. However, there is anecdotal evidence that global pearl production will be reduced over the next two years which will affect supply in the medium term. The group will continue to focus resources on continued improvements in efficiencies, maintaining production levels and the effective distribution of its pearls into the loose wholesale market and jewellery product
