Facing declining revenue, Cyanotech looks to diversify
Cyanotech Corp. yesterday posted a net loss of $321,000 in its fiscal second quarter on declining revenue from products made from microalgae, and the company announced a plan that could help diversify sales.
The Big Island company said it plans to market its fish-feed product, NatuRose, as a way of giving tropical fish more vivid-colored skin. NatuRose, an animal feed derived from natural astaxanthin, currently allows farmers to grow seabream -- called tai in Japan-- with a pink flesh pigmentation.
"We feel the seabream market is temporarily depressed," said Gerald Cysewski, chairman and chief executive of Cyanotech. "There is a decreased demand for the seabream market. We're expanding the market application for NatuRose."
Cyanotech, which cultivates its products from microalgae, said the company's revenue last quarter declined 16 percent to $2.5 million from $3 million a year earlier. The company had a loss of 2 cents a share compared with a gain of 1 cent a share a year earlier, when the company earned $121,000.
Besides the decreased demand for NatuRose, sales of Spirulina, a general health supplement, also fell during the quarter because of inconsistent orders, Cyanotech said.
Sales of a third product, BioAstin, were up slightly even though order levels from its two largest customers decreased. BioAstin has been shown in some company studies to be more than 500 times stronger than Vitamin E and is used as an anti-inflammatory. Clinical trials also have shown it to be effective in reducing symptoms of carpal tunnel syndrome, rheumatoid arthritis and other ailments.
"BioAstin is our major emphasis going forward," Cysewski said.
Cysewski said NatuRose is effective in the seabream market because it's a source of astaxanthin that is closer in chemical composition to what fish receive in the wild.
He also said that studies are under way to determine the potential of NatuRose for decreasing mortality and improving absorption of food by young fish.
Cyanotech's gross profit margin, the percentage of sales left after subtracting production costs, fell to 23 percent last quarter from 35 percent a year earlier. The company attributed the decrease to higher-per-unit natural astaxanthin production costs due to the company's decision to cut production in response to overall order levels.