Posted on: Tuesday, November 2, 2004
Cyanotech profits continue
By Sean Hao
Advertiser Staff Writer
Kona-based microalgae maker Cyanotech Corp. yesterday posted a profit for the fourth consecutive quarter despite a drop in demand from Japan and increasing competition from Europe.
Profits for the three months ended Sept. 30 were $121,000, or a penny a share, versus a loss of $10,000 in the year-ago period. Sales rose 6 percent to nearly $3 million. Though earnings remain modest, the second fiscal quarter marked the first time the maker of dietary supplements posted four consecutive profitable quarters since the 1997-98 time frame.
Results during the quarter were hurt by slackening demand from Japan, where inclement weather slowed the activity of fish farming operations that purchase Cyanotech's products. Also cutting into Cyanotech sales was competition from synthetic European-made astaxanthin, the company said. Those factors were partly offset by the filling of a backlog of spirulina microalgae orders that were delayed earlier in the year because of rainy weather, said Gerald Cysewski, Cyanotech's chairman, president and chief executive.
Going forward, the company plans to increase profits by completing conversion of 10 of its spirulina microalgae growth ponds to grow astaxanthin. Demand for astaxanthin, which is a human and animal dietary supplement, is outstripping Cyanotech's production capacity, Cysewski said.
Astaxanthin sales generate greater profit margins than spirulina, which also is a dietary supplement. The expansion, which is scheduled for completion by year's end, should boost astaxanthin production capacity by up to 70 percent, Cyanotech said.
Beyond that, earnings growth will come from building markets for the company's products, Cysewski said.
"Our future focus really is going to be on research and development and to develop scientific support to further support sales of BioAstin natural astaxanthin into the human market," he said.
During the first two quarters of the fiscal year, Cyanotech earned $234,000, or a penny a share, versus a loss of $151,000, or a penny a share, in the prior year period. Sales rose nearly 8 percent to $5.71 million.
Shares of Cyanotech closed down nearly 2 cents at $1.26 on the Nasdaq SmallCap Market in advance of the results, which were released after the markets closed.
Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.
