Martek Biosciences reported an increase in revenues to $26.4 million for the second quarter ended April 30, 2003, up from $11.4 million for same quarter in 2002. The company also raised its net income to $3.1 million, compared to a net loss of $17.9 million in the 2002 second quarter, although the 2002 figure included a $15.8 million charge relating to the purchase of OmegaTech that year.
"Q-2 was another good growth quarter for the company," said Henry Linsert, chief executive officer of Martek. "Strong demand and increasing production capacity should lead to continued growth in revenues and earnings throughout '03."
For the year to date, Martek has earned net income of $5.2 million, against a net loss of $20.9 million for 2002 and for the six months to end of April, revenues of $47.0 million are up from $17.4 million from the previous quarter.
The 132 per cent revenue rise in second quarter revenues was mainly due to higher sales of nutritional products to the company's infant formula licensees, said Martek. Over 90 per cent of Martek's 2nd quarter revenue was generated by sales of docosahexaenoic acid (DHA) and arachidonic acid (ARA) to three of itsinfant formula licensees: Mead Johnson, Wyeth and Abbott Laboratories. Supplemented term infant formulas manufactured by these companies were introduced in the US in 2002 and are now collectively being marketed in over 30 countries around the world.
Also, BJ's Wholesale Club recently began marketing a private label infant formula that includes Martek's DHA and ARA. The formula is manufactured by Wyeth and is sold under the Berkley & Jensen label.
Gross profit margin, which improved to 41 per cent during the quarter, up from 27 per cent for the previous year's period, was helped by lower ARA costs from DSM, Martek's third party manufacturer of ARA oil. DSM has achieved economies of scale in its production of ARA in Capua, Italy, but these were partially offset by weakness in the US dollar exchange rate with the Euro.
Martek added that although it expects continued decreases in the future costs of ARA from DSM as Martek's sales volumes continue to increase, these cost savings may be negatively impacted by continued weakness in the US Dollar exchange rate with the Euro.
Research and development expenses decreased by 20 per cent in the second quarter, despite the costs associated with Martek Boulder (formerly OmegaTech), acquired in April 2002, which accounted for an additional $493,000 in research and development costs not incurred by Martek in the previous year's second quarter. Martek's research and development expenses are decreasing as many of the large-scale development projects at its Winchester plant have been completed.
The company has also raised net proceeds of approximately $84 million through a public offering of its common stock, to fund expansion of production to meet the growing demand for its nutritional oils.