The company yesterday said it had recorded a $6.1m net loss in the quarter ended June 30 2008, down from a profit of $2m last year.
As well as the cut in production due to sourcing difficulties, the firm was also impacted by a combination of higher operating expenses, lower rice bran sales compared to last year, and an inventory build designed to handle an expected influx of new customers in the fourth quarter this year.
However, the firm remains upbeat about its performance going forward, and says it is moving ahead with plans to build what it claims will be the world’s largest rice bran oil refinery, located in China.
This, it says, will be over seven times the size of its current Brazilian facility, and will generate seven times the revenue. NutraCea said it hopes to “shortly” obtain all necessary permits and approvals, and is expecting to start construction later this year.
NutraCea is divided into two business segments: NutraCea, which focuses on the production of stabilized rice bran; and Irgovel, which the company acquired in February this year, and which produces rice bran oil.
During the second quarter this year, the NutraCea segment operated at only 30 percent capacity, which the company said was a result of “difficulties in obtaining adequate quantities of rice bran”.
The firm’s plant in Mermentau, Louisiana, was not operational from May through July because the rice mill that serves that facility was not milling rice. Additionally its Lake Charles, Louisiana, facility did not reach production levels, which the firm said was because the rice mill was phasing in its contract for rice bran.
“Beginning this month, we anticipate that both of these mills will be operational and our plants will be receiving 100 percent of the output from each mill," said Leo Gingras, COO of NutraCea.
Total revenue for the second quarter this year stood at $10.3m, down from $13m last year. However, NutraCea said this was primarily because last year’s revenue was boosted by a $5m one-off licensing fee.
The firm also highlighted that in Q2 2007 it had made two major sales to stabilized rice bran (SRB) customers of $2.1m and $2.6m respectively. This offset this year’s more modest increase of $615,000 in sales of SRB, it said.
NutraCea’s president and CEO Brad Edson also highlighted that the newly acquired Irgovel “has come on rapidly”. By year end, the company expects the facility to have annual sales of around $30m.
“We are also on track to add an additional 45,000 tons of annual capacity at Irgovel by the end of first quarter 2009 which would give us a total annual capacity of 115,000 tons, based on existing results this would produce a corresponding increase in gross and net of at least 60 percent,” he said.
In the long-run, the company estimates that it will more than double the profitability of Irgovel as it will have installed its propriety technology in the plant for when the additional capacity comes on line.
The company is also moving forward with another planned expansion, estimated to increase the Irgovel annual capacity to over 200,000 tons by the first quarter of 2010.