North American Revenue Up 61% While Europe Slumps 70% in H1 FY25
Advance ZincTek reports steady profit before tax for H1 FY25, driven by strong North American growth and significant cost savings following its Perth facility closure.
- H1 FY25 profit before tax comparable to H1 FY24
- North American revenue up 61.1%, surpassing full FY24 sales
- European revenue down 70.5%, impacted by White Sapphire delays
- Perth factory closure to deliver up to $1 million annual cost savings
- White Sapphire product line advancing with new variants and customer trials
Steady Profit Amid Mixed Regional Performance
Advance ZincTek Ltd (ASX: ANO) has released its unaudited first half FY25 results, revealing a profit before tax broadly in line with the same period last year. Despite a slight dip in overall revenue to $5.51 million from $5.63 million in H1 FY24, the company’s financial footing remains stable amid challenging global conditions.
North America emerged as the standout region, with revenue soaring 61.1% to $3.13 million, already exceeding total sales for the entire FY24. This surge underscores the success of Advance ZincTek’s strategic focus on expanding its distributor network in the US, where it is actively pursuing additional partnerships to sustain momentum.
European and Asian Markets Face Headwinds
Conversely, European revenues plummeted 70.5% to $419,000, largely due to delays in the shipment of the company’s White Sapphire product. The first order is now expected to ship in January 2025, with further orders contingent on final specification approvals. Asia also saw a 14% decline to $982,000, attributed to timing differences in order fulfillment rather than a fundamental drop in demand.
Despite these setbacks, the board expressed confidence in continued sales growth across Europe, Japan, and Korea, supported by a new European distribution strategy unveiled at the October 2024 AGM. This approach involves offering exclusive product-specific distributorships designed to accelerate market penetration.
Operational Restructuring Yields Cost Savings
Significant operational changes were also highlighted, with the Perth factory and warehouses now closed. The associated redundancy and relocation costs have been fully expensed in this half, paving the way for anticipated annual cost savings of up to $1 million. These savings are expected to become fully apparent in the second half of FY25 and beyond, potentially improving the company’s margin profile.
White Sapphire Product Development Progresses
Advance ZincTek is advancing three White Sapphire projects: Dry Feel, Light Diffusing, and High Purity variants. The Dry Feel product is already being airfreighted to a major customer, with further sales expected once specifications are finalised. The Light Diffusing variant, positioned as a more cost-effective alternative, is slated for customer sampling in Q1 2025. Meanwhile, the High Purity product has identified 13 applications and over 500 potential customers, signaling substantial market opportunity.
In Australia, sales of Zinc Oxide have been modestly impacted by the influx of inferior imported products lacking proper TGA licensing and GMP clearances. The company is hopeful that regulatory measures will be introduced to curb these imports, which could restore competitive balance in the domestic market.
Overall, Advance ZincTek’s H1 FY25 update paints a picture of a company navigating regional disparities with strategic agility, leveraging operational efficiencies and product innovation to underpin future growth.
Bottom Line?
Advance ZincTek’s next challenge will be converting its White Sapphire pipeline and European distributor strategy into tangible revenue gains.
Questions in the middle?
- Will the new European exclusive distributorship model reverse the steep revenue decline?
- How quickly will the $1 million annual cost savings impact profitability in H2 FY25?
- What regulatory actions will the TGA take regarding inferior Zinc Oxide imports affecting Australian sales?
