Forbes Reducol sales up but loss continues

By Lorraine Heller

- Last updated on GMT

Related tags Stock market

Forbes Medi-Tech continues to see a net loss from operations, but
has said that sales of its flagship cholesterol-lowering ingredient
remain strong.

The company reported total revenue for the year ended December 31 2006 of CA$9.4m, a 31 percent increase from last year. However, net loss for the period was CA$11.7m, more than last year's loss of CA$10.8m. According to the firm's chief financial officer David Goold, the loss does not reflect on Forbes' nutraceutical sales, which continued to show good growth. "The loss is mainly down to a number of inventory write downs and an ongoing pharmaceutical research program, which tends to use up funds but is expected to have longer-term returns,"​ he told The firm spent some CA$3.5m on R&D during the year and CA$840,000 on inventory adjustments. Reducol ​ Sales for its branded phytosterol ingredient Reducol reached $8.9m during the year, compared to CA$6.1m in 2006, said Goold. These figures include sales of the ingredient as well as the company's sales of its finished products using the ingredient. The company said that 2007 saw continued expansion of Reducal in markets around the world. The ingredient is now used in products in 12 countries, it said. For example, a rye bread containing Reducal was introduced into Finland and, milk drinks made with the ingredient were launched in The Netherlands and Taiwan "While the company continues to launch in key international markets, the US market remains a major focus for Forbes,"​ said the firm in a statement. The company said it continues to work with various US food manufacturers but the completion of the product development stage and the timing of product launches is unclear at this point In 2006 Reducal was launched as a product ingredient through retailers including Tesco and Wal-Mart/ASDA in the United Kingdom, Albert Heijn in the Netherlands, Kesko in Finland, Modelo Continente and Jeronimo Martins in Portugal as well as Carrefour in France. Outlook ​ Forbes said it forecasts continued strong growth in Reducol for 2008, and expects to see sales of CA$9.75 - $10.5m, based on the contracted and forecasted tonnage of Reducol and other value-added products in the functional food and dietary supplement markets. Reorganization ​ Forbes also announced that its planned reorganization has been finalized. The move, which resulted in the creation of a new legal entity that now wholly owns the Canadian company, will have no external impact on customers, said Goold. In addition, the company's name remains the same. The decision for the reorganization can be summarized by two main reasons, he said. Firstly, it provides more flexibility to conduct business and raise equity on US equity markets. Secondly, it allows for a 1-8 share split, which means that the numbers of shares are decreased but the share price is increased to achieve the minimum US$1/share required by NASDAQ.

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