Cyanotech merely maintains in fiscal 2005

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Over the past year Cyanotech has had to contend with the impact of
poor weather conditions on sales and the cost of necessary
maintenance and expansion programs - and still managed to achieve
sales broadly in line with the previous year, reports Jess

But while the Hawaiian microalgae company achieved net sales of $11.45 million compared to $11.58 a year ago and a 22 percent increase in net income to $399,000, the positive bent did not carry through to its income from operations.

The 23 percent drop to $562,000 from $729,000 last year is attributed largely to a $108,000 increase in R&D expenses and decreased gross profit. Operating expenses also went up by $45,000 to $3.36 million.

"Although our fiscal 2005 results did not meet our expectations we were able to maintain revenue levels consistent with the prior year despite the impact of weather-related difficulties encountered by our Japan aquaculture customers,"​ said Gerald Cysewski, chairman, president and CEO.

When it released its 2Q results in November the company said that inclement weather in Japan had affected the fish farming operations of some of its customers, which had a knock-on effect on demand for natural astaxanthin.

"While we anticipate demand for natural astaxanthin over the next two quarters to be consistent with that of current quarter levels, we believe the demand will rebound in the future to levels consistent with prior demand patterns,"​ said Cysewski at the time.

Indeed flat full year results were no thanks to 4Q 2005, when the company experienced a loss from operations of $90,000. In 4Q 2004 it reported income from operations of $455,000.

In contrast to the net profit of $441,000 made in 4Q 2004, Cyanotech made a net loss of $74,000 during the same three months of 2005.

Gross profit fell 40 percent in the quarter to $714,000. The company said that the decrease in profit margin from 36 percent last year to 28 percent was due to maintenance of pond liners, which resulted in higher unit costs of production.

However, 4Q sales also fell by 22 percent to $2.56 million. Lower bulk sales of Spirulina and NatuRose were said to be the main culprits, while increased BioAstin sales kept the impact from being even more severe.

"During this year we concluded our pond conversion plan thereby greatly improving our ability to meet market demand,"​ said Cysewski, who drew attention to the fact that the company funded these improvements through its operations and still managed to increase working capital by 25 percent over the year to $5.1 million.

"We now have a better production infrastructure in place and will be focusing our efforts in the coming year on increasing our market share for NatuRose and BioAstin through scientific studies and promotional advertising."

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