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Cyanotech posts profit
in quarter
Cyanotech Corp. swung to a $121,000 gain from a year-ago loss to register its fourth profitable quarter in a row even as bad weather in Japan and competition in Europe hurt sales of one of the biotech company's fastest-growing products.
The Big Island producer of nutritional supplements and animal feed from microalgae said yesterday that net income in its fiscal second quarter ended Sept. 30 continued to improve from a year ago, when it lost $10,000, or zero cents per share. The company's earnings last quarter amounted to 1 cent a share.
Revenues rose 6 percent to $3 million last quarter from $2.8 million.
Cyanotech's gross profit margin, or the percentage of sales left after subtracting production costs, increased to 35 percent from 30 percent a year ago.
"Demand for NatuRose was lower than we anticipated due in large part to the effect of weather on our customers' operations in Japan, but we believe our market there remains strong in spite of the difficulties encountered by the Japanese aquaculture market," said Gerald Cysewski, chairman, president and chief executive of Cyanotech.
NatuRose, an animal feed derived from astaxanthin, allows fish farmers to grow fish with a pink flesh pigmentation, avoiding the synthetic pigmentation that could create possible health concerns.
The company said sales of NatuRose also were affected by competitive pricing from synthetic astaxanthin products in Europe.
Cysewski said he expects demand for NatuRose in the next two quarters to be consistent with current quarter levels, but he anticipates demand to rebound in the future.
Cyanotech, which had lost money for 22 quarters in a row before reversing its fortunes, said it is on track in converting 10 of its 54 Spirulina ponds to astaxanthin ponds by the end of the year. The conversion will give Cyanotech 44 ponds for Spirulina production and 25 for astaxanthin output.
The company's astaxanthin products, which also include BioAstin, have a higher unit sales price and profit margin than Spirulina, which is used as a general health product but is in a mature market and is seeing just single-digit growth.
BioAstin, which has been shown in some company studies to be more than 500 times stronger than Vitamin E, is an anti-inflammatory that can deliver health benefits to the central nervous system. Clinical trials also have shown it to be effective in reducing symptoms of carpal tunnel syndrome, rheumatoid arthritis and other ailments.
"We continue to make strategic investments in operations and infrastructure proportionate to our increase in revenues and improved gross profit," Cysewski said.
