Seafarms Faces Legal Uncertainty and Market Pressures Despite Improved Results

Financial Performance and Market Challenges

Seafarms Group Limited has released its preliminary final report for the year ended 30 June 2025, revealing a loss after tax of $11.7 million. While this represents a significant improvement from the $19.3 million loss recorded the previous year, the company’s revenue fell sharply by 43% to $14.57 million. The decline reflects a combination of lower production volumes and subdued demand in the Australian prawn market.

The Group produced 605 metric tonnes of prawns in FY2025, down from 1,186 tonnes in FY2024. This reduction was a strategic response to weaker market conditions, particularly for higher-value protein products like prawns, which have faced competition from lower-priced alternatives amid ongoing cost-of-living pressures.

Operational Setbacks and Environmental Impact

Production was notably affected by major flooding of the Herbert River in February 2025, which disrupted access to Farm 3 where Black Tiger prawns are cultivated. Although the ponds were not flooded, the inability to access the farm for several days and the resulting low salinity conditions adversely impacted crop performance. The company credits its staff’s extraordinary efforts and support from its Cardwell operations for salvaging the crop under challenging conditions.

Banana prawn stocking was also reduced due to subdued retail demand and high frozen stock levels in the industry, further contributing to the lower overall production.

Project Sea Dragon – Legal Uncertainties Persist

Project Sea Dragon Pty Limited, a key subsidiary focused on aquaculture expansion, was placed into liquidation by court order on 1 November 2024. Seafarms has recovered $1.4 million of funds advanced to the project but is embroiled in ongoing legal proceedings over the return of an additional $1.75 million held by the court. The Federal Court initially ruled these funds belonged to the liquidator, but Seafarms successfully appealed, with a judgment pending for several months.

The outcome of this appeal is critical for Seafarms’ financial position. Should the company prevail, the full $1.75 million will be returned; if not, it expects to recover approximately 82% of the liquidation proceeds after fees.

Asset Sales and Balance Sheet Movements

In a notable transaction during the year, Seafarms sold Farms 1 and 2 at Cardwell for $13.5 million, generating a gain of $8.38 million. The farms were leased back for a short term, allowing continued production for key market periods such as Christmas. This sale helped bolster cash flow amid operational challenges.

Despite these efforts, net tangible assets per share declined to 0.06 cents from 0.31 cents, reflecting the impact of losses and asset deconsolidation related to Project Sea Dragon. The Group’s cash position improved to $3.3 million at year-end, supported by borrowings that increased to $7 million.

Looking Ahead – Investment and Market Development

Seafarms continues to invest in its domestication and breeding programs, with all Black Tiger prawns stocked during the year sourced from domesticated broodstock. The company is also focused on developing international markets as part of its long-term strategy, despite near-term headwinds in domestic demand and legal uncertainties.

Management acknowledges the ongoing challenges posed by legal disputes, environmental risks, and market pressures but remains committed to expanding its aquaculture operations and capitalising on emerging opportunities.