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Cyanotech, which posted its fifth profitable quarter in a row, had net income of $326,000, or 2 cents a share, compared with $109,000, or 1 cent a share, a year ago. Revenue climbed to $3.2 million from $3 million. Sales rose 6 percent from the preceding quarter.
The company also said it completed the conversion of six of its 54 Spirulina ponds to natural astaxanthin ponds by the end of December. BioAstin and NatuRose have a higher unit sales price than Spirulina, which is used as a general health product but is in a mature market. However, because poor weather flattened sales of NatuRose in Japan, the company is continuing to cultivate Spirulina in the converted ponds.
"We don't feel compelled at this point to switch the ponds over to astaxanthin cultivation because what we're finding in terms of product mix is that we generated revenues this quarter with more Spirulina sales than with astaxanthin sales," Cyanotech Chief Financial Officer Jeff H. Sakamoto said. "Right now, we're content at where we are and we don't want to stop cultivation of one product while demand is so high to serve a market that may not respond very quickly. If it does, we'll still have the capacity to meet it."
The natural astaxanthin ponds are flexible enough to cultivate either Spirulina or the natural astaxanthin products, while it would be difficult to cultivate natural astaxanthin products in the Spirulina ponds, Sakamoto said.
Last month, Cyanotech said four other Spirulina ponds scheduled for conversion would be delayed because of the bad weather in Japan and competitive pricing from synthetic astaxanthin products in Europe. Sakamoto said those four ponds will be converted when the company gets a firmer sense of when the NatuRose market will recover. Cyanotech now has 48 Spirulina ponds and 21 natural astaxanthin ponds.
Cyanotech's gross profit margin, or the percentage of sales left after subtracting production costs, slipped to 37 percent last quarter from 39 percent a year earlier because of more revenue generated from the sale of lower-margin Spirulina. However, Cyanotech's gross margin was up from 35 percent in the previous quarter.