Sales slump in China leads to Cyanotech loss

By Rick Daysog
Star-Bulletin

Cyanotech Corp. lost $286,000 during the three months ending Dec. 31, reflecting lower sales in China.

The Kailua-Kona-based microalgae producer said it lost 2 cents a share during its fiscal third quarter, compared with a profit of 6 cents a share, or a $956,000 profit, in the same period last year.

The company reported revenues of $1.56 million during its fiscal third quarter, a 43.8 percent decline from the year-earlier's $2.78 million.

For the nine months ending Dec. 31, the company said it lost $215,000, a 2 cents per share loss, compared with a profit of $2.91 million or 18 cents a share.

"The poor performance ... is due largely to lower sales of Spirulina to our largest customer in China," said Gerald Cysewski, Cyanotech's chief executive officer.

Cysewski said the company sold just $160,000 of its Spirulina nutritional supplement to their customer in China, down from $1.5 million in the year-earlier period.

Cyanotech said its largest customer, a Hong Kong-based network marketing company, experienced a delay in obtaining its annual recertification by the Chinese government.

The company needs the license to host large-scale distributor meetings in mainland China.

Cysewski said he believes that the current economic turmoil in Asia has not been a factor in the company's declining sales but may hurt future sales.

Cyanotech noted that it recently lowered its production of Spirulina for the short term to reduce inventory levels. The company said it has about 12 weeks of Spirulina production in inventory, which is the same as last year.

Cyanotech released its earnings report yesterday after the stock market closed. Its shares, traded on the Nasdaq stock market, closed today at $2.75, down 121/2 cents.