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Cyanotech reports growth of 47% for consumer algal products in 2Q
November 11, 2013
ailua Kona, Hawaii-based Cyanotech Corporation, a leader in high-value nutrition and health products from microalgae, has announced financial results for the second quarter and first six months of fiscal year 2014, ended September 30, 2013.
For the second quarter of fiscal 2014 compared to the second quarter of fiscal 2013, net sales were $7,299,000 compared to $6,936,000, an increase of 5.2%. Gross profit was $2,993,000, with gross profit margin of 41%, compared to gross profit of $2,812,000 and gross profit margin of 40.5%. Net income was $106,000 or $0.02 per diluted share, compared to net income of $476,000 or $0.08 per diluted share.
Regarding the second quarter of fiscal 2014 results (changes shown versus the second quarter of fiscal 2013), Brent Bailey, President and CEO, stated, “Total company net sales growth was only +5% largely due to our inability to meet Astaxanthin demand. In spite of the Astaxanthin supply constraint, our consumer products business (Nutrex) grew +47% in the quarter. Net sales growth for these products, by area, was:
- Nutrex Mainland: +60%
- Nutrex Hawaii: +9%
- Nutrex Direct: +29%
- Nutrex International +75%
“Retail sales growth of our Astaxanthin products in the U.S. natural products channel was +81% with a market share of 53.8% (+18.4 pts.). Our Spirulina retail dollar growth for the quarter was +28% with a market share of 50.7% (+6.2 pts.).”
Cyanotech showed a +59% growth in their Bulk Spirulina business. Spirulina production has recovered after a difficult FY2013 and was up +109% versus second quarter fiscal 2013. But, Bailey said, they were unable to keep pace with
Astaxanthin demand in the second quarter due to:
- Continued strong growth of Astaxanthin in both the bulk and consumer markets
- Poor yields from a major extraction supplier due to a switch from batch to continuous processing. They have since gone back to batch processing and yields have returned to historical levels. Since Bulk utilizes 85% of Cyanotech’s Astaxanthin raw material, second quarter net sales were significantly impacted and the company expects third quarter to be impacted as well.
- Environmental factors that have affected the quantity, but not the quality, of the company’s output during the second quarter. They continue to adjust the culture parameters to increase production rates; however, lower production rates could persist until the fourth quarter of fiscal 2014.
For the first six months of fiscal 2014 compared to the first six months of fiscal 2013, net sales were $14,208,000 compared to $13,442,000, an increase of 5.7%. Gross profit was $5,845,000, with gross profit margin of 41.1%, compared to gross profit of $5,386,000 and gross profit margin of 40.1%. Pretax income was $471,000 compared to $989,000, and net income was $136,000 or $0.02 per diluted share, compared to net income of $969,000 or $0.17 per diluted share.