Cyanotech outlines more cost-reductions as challenges continue

By Lorraine Heller

- Last updated on GMT

Related tags: Generally accepted accounting principles

Microalgae supplier Cyanotech said it will focus on improving
cultivation yields, reducing supply chain costs and expanding
product lines as it emerges from a difficult fiscal 2008.

The Hawaiian company last week announced that sales for the year ended March 31 2008 were up on last year, but admitted that the year has been "challenging". ​The firm has focused on cost-reduction initiatives for some time now, in an attempt to maintain sales momentum in a tough environment. Part of the challenges it has faced have been due to external factors such as weather at home and in the locale of its aquaculture customers. In the past, it aimed to counter fluctuations in demand caused by factors like these by making its production set-up more flexible. In the past year, the company has also discontinued unprofitable business and trimmed its workforce, as part of "decisive steps"​ to move forward in a positive direction. Cyanotech's new chief executive officer Andrew Jacobson said that during his first year he would work on "improving cultivation yields, reducing supply chain costs, expanding product offerings, delivering the highest quality products, and growing the business". Figures ​Sales for the fourth quarter stood at $3.4m, a 47 percent increase on the prior year quarter. Sales for fiscal 2008 were $11.4m, compared to $9.7m in 2007. Gross profit for the quarter was $1.2m, compared to $178,000 last year. Gross profit for the year was $3.1m, compared to $1.1m. The company recorded net income of $181,000 for the quarter, a marked improvement from a net loss of $5.3m the year before. However, during the full fiscal year the company still recorded a loss of $1.1m. This compares to last year's loss of $7.4m. "As we look ahead to the new fiscal year we see promise and, yes, challenge,"​ said Jacobson."We will focus on building a stronger foundation to supply and service our ever-expanding market place. We will work to be more efficient and effective. Rising fuel and energy costs combined with a slowing US economy will require a focused team effort to achieve our objective." Products ​One of the challenges faced by the firm earlier on in the year was spirulina production, which was stunted by torrential rains and flooding in December. This had made it difficult for the firm to meet demand in its third quarter. Spirulina, which holds Generally Recognized as Safe (GRAS) status for use in foods and drinks in the US, saw a 26 percent reduction in sales during the third quarter. Cyanotech is also a major supplier of the antioxidant astaxanthin, and claims its BioAstin branded ingredient is the world's best selling brand of astaxanthin for humans. It grows the microalgae from which it derives the ingredient in shallow ponds at its 90-acre facility along Hawaii's coastline, and markets it for its anti-inflammatory benefits, and for its ability to enhance skin, muscle and joint health.

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