Agricultural Retailer Farmmi Reports Losses; Optimistic on Prospects

The Zhejiang-based mushroom retailer said that China's market is underpenetrated and expressed optimism in the growth potential.

Author: Belinda Zhou   

Farmmi Inc. (Nasdaq: FAMI) reported revenue growth for the six months through March that boosted its stock nearly 4 percent intraday Wednesday, to $1.48 per share. 

The Lishui City-based company, selling mushrooms since 2003, said in a statement on Tuesday evening that its revenue in the half-year through March reached $14.4 million, up 11% year-over-year. Net loss hit $170,000, or 1 cent per American depositary share, in contrast to $1.2 million in profits in the corresponding period in 2018.

The retailer in Zhejiang Province said it benefited from the growing demand for healthy agricultural products of and expected to expand in the near future. 

"In line with our plan, we bolstered our operations team earlier this year and completed development of our robust online e-commerce platform," Yefang Zhang, the chairwoman and chief executive officer of Farmmi, said in a statement.

The company said the losses in the half-year resulted from of the amortization of debt issuance and interest expense incurred for the senior convertible notes. 

Farmmi completed a private placement of $7.5 million in senior convertible notes in November 2018.

The company expressed a positive outlook for its business, saying it seeks to boost the margin and market penetration in China. "We expect the demand for our products will continue to grow in China as consumption of mushroom products has consistently risen since 2011," Zhang said.

More than 148,200 tons of Chinese mushrooms worth $2.3 billion were exported in 2018, at an increase of 15.3% year-over-year, according to General Administration of Customs of the People's Republic of China.

Farmmi's stock has slipped 78% since the company debuted in New York in February 2018.