Cyanotech profits from increased microalgae productivity

By Lorraine Heller

- Last updated on GMT

Related tags: Gross profit, Revenue, Generally accepted accounting principles

Microalgae supplier Cyanotech said an increased productivity for spirulina and astaxanthin have helped lift its business out of loss in the second quarter.

The Hawaiian firm reported net income of $434,000 for the first six months of fiscal 2009, compared to the $726,000 loss it had reported last year.

This continues the growth the company had posted in its first quarter, and reflects an increased focus on improving cultivation yields, reducing supply chain costs and expanding product lines after a difficult fiscal 2008.

Challenges

Part of the challenges Cyanotech has faced recently 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.

According to Cyanotech’s CEO Andrew Jacobson, in the second quarter the firm “saw the efforts of [its] new cultivation strategy begin to show benefits”.

“We experienced increased productivity of 53.5 percent for spirulina and 34 percent for astaxanthin over the second quarter of fiscal 2008,”​ he said.

“These gains, combined with our cost containment efforts and strong top line, delivered a 79.4 per cent increase in gross profit and a 13 point gross margin improvement over the prior year period.”

Performance

Cyanotech said revenues for the first six months of fiscal 2009 increased 35 percent to $6,975,000, compared to revenues of $5,187,000 last year.

Gross profit for the period was $2,682,000, with gross profit margin of 38 percent, compared to a gross profit of $1,514,000 and gross profit margin of 29 percent last year.

“Our results for the second quarter and first half of fiscal 2009 are promising. We have delivered $434,000 in profit, resulting in a $1.16m improvement over the first half of fiscal 2008,”​ said Jacobson.

Products

The firm’s spirulina, which holds Generally Recognized as Safe (GRAS) status for use in foods and drinks in the US, is marketed as augmenting energy and immune response.

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.

Related topics: Financial focus, Suppliers

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