{"id":156598,"date":"2023-11-22T10:00:10","date_gmt":"2023-11-22T15:00:10","guid":{"rendered":"https:\/\/44.250.171.167\/?p=156598"},"modified":"2023-11-22T10:00:12","modified_gmt":"2023-11-22T15:00:12","slug":"apex-frozen-foods-limited-q2-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/apex-frozen-foods-limited-q2-fy24-earnings-conference-call-insights\/","title":{"rendered":"Apex Frozen Foods Limited Q2 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Apex Frozen Foods Limited (APEX) Q2 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Quarterly Performance<\/strong>\n<ul>\n<li>Volumes down 13% due to weak US demand.<\/li>\n<li>Realizations down 10% with lower shrimp prices.<\/li>\n<li>Change in sales mix with higher EU share where no RTE sales.<\/li>\n<li>Cost corrections in some key items.<\/li>\n<li>Enabled 300 bps sequential EBITDA margin expansion.<\/li>\n<li>1% EBITDA margin in Q2FY24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Debt Reduction<\/strong>\n<ul>\n<li>Reduced debt by INR7 crore in H1FY24 to INR83 crore.<\/li>\n<li>Debt to equity at favorable 0.17x.<\/li>\n<li>Working capital cycle also improving.<\/li>\n<\/ul>\n<\/li>\n<li><strong>US Demand Outlook<\/strong>\n<ul>\n<li>Situation easing slowly, better by end of calendar year.<\/li>\n<li>Optimistic on demand revival by Q4FY24 as inventory backlogs clear.<\/li>\n<li>Retail customers also planning promotions for next year.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Market Expansion<\/strong>\n<ul>\n<li>Exploring markets outside US to diversify.<\/li>\n<li>Focusing more on Europe, other East European markets.<\/li>\n<li>Move will enhance resilience to market fluctuations, but remain cautiously optimistic on overall scenario.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Farm Exits<\/strong>\n<ul>\n<li>Exited 1,500 plus acres of shrimp farms from 2021-2023.<\/li>\n<li>Done due to difficulty in managing spread out farms and for better profitability.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Ecuador Production Outlook<\/strong>\n<ul>\n<li>Seeing viability issues currently at farm level due to withdrawal of subsidies and other government support.<\/li>\n<li>Impact expected in 2024 with new production planning.<\/li>\n<li>Constraints on market&#8217;s ability to absorb supply volumes.<\/li>\n<\/ul>\n<\/li>\n<li><strong>India Dynamics<\/strong>\n<ul>\n<li>Costs and low prices causing cautious approach currently.<\/li>\n<li>Aggressiveness of past not there but still slowly stocking ponds.<\/li>\n<li>India farm gate prices around INR300 per kg on average.<\/li>\n<li>Stable over 2022 and 2023 so far.<\/li>\n<li>Changing stocking densities, harvest sizes, crop lengths.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capacity Expansion<\/strong>\n<ul>\n<li>Apex recently expanded capacity by 25,000 metric tons, including 5,000 metric tons for ready-to-eat products.<\/li>\n<li>However, new capacity not yet approved for exports to EU, which is company&#8217;s second largest market.<\/li>\n<li>Other companies have also expanded capacity based on their specific business strategies and target markets.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Indian Shrimp Export Barriers<\/strong>\n<ul>\n<li>Currently 4-9% duties on shrimp exported from India to EU.<\/li>\n<li>India-EU free trade agreement discussions could reduce or eliminate these duties.<\/li>\n<li>Approval for 25,000 metric tons of new capacity exports contingent on India-EU agreement.<\/li>\n<li>Petition filed in US to impose countervailing duties on Indian shrimp imports, alleging subsidies; could impact industry in 2024.<\/li>\n<\/ul>\n<\/li>\n<li><strong>India Facility Approval Delays<\/strong>\n<ul>\n<li>New shrimp processing facilities awaiting regulatory approval from EU for exports for past 3 plus years.<\/li>\n<li>Holdup seems to be more political\/diplomatic rather than related to facility audits or inspections.<\/li>\n<li>May be linked to broader trade discussions between India and EU.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Shrimp Production Costs &#8211; India vs Ecuador<\/strong>\n<ul>\n<li>Ecuador focused on commodity whole head-on shrimp.<\/li>\n<li>Ecuador Lacks value-added ready-to-cook (RTC) and ready-to-eat (RTE) capacity.<\/li>\n<li>Lack skilled labor, trying to use machines, but difficult to achieve same yields and quality as manual processing.<\/li>\n<li>Asian countries like India, Vietnam, Indonesia have access to skilled labor for RTC and RTE production.<\/li>\n<li>Ecuador&#8217;s costs likely higher than India due to labor constraints and dependence on automation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Apex Frozen Foods Limited (APEX) Q2 FY24 Earnings Concall Quarterly Performance Volumes down 13% due to weak US demand. Realizations down 10% with lower shrimp prices. Change in sales mix with higher EU share where no RTE sales. Cost corrections in some key items. Enabled 300 bps sequential EBITDA margin expansion. 1% [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,12],"tags":[10169,8982],"class_list":["post-156598","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-other-industries","tag-earnings","tag-food-processing"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":155965,"url":"https:\/\/alphastreet.com\/india\/dilip-buildcon-limited-q2-fy24-earnings-conference-call-insights\/","url_meta":{"origin":156598,"position":0},"title":"Dilip Buildcon Limited Q2 FY24 Earnings Conference Call Insights","author":"Praveen","date":"November 8, 2023","format":false,"excerpt":"Key highlights from Dilip Buildcon Limited (DBL) Q2 FY24 Earnings Concall Company Strategy Updates Reduced debt by INR300 crores so far in FY2024. 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