Neptune promises productivity boost as sales rise but profits slide

16-Aug-2011 - Last updated on 17-Aug-2011 at 14:46 GMT

The first phase of an expansion at Neptune’s facility in Sherbrooke, Quebec, should be completed by March 2012

Canadian krill oil firm Neptune Technologies & Bioressources posted a modest rise in revenues in the first quarter of 2012 but said its bottom line had suffered owing to changes in exchange rates, a switch to International Financial Reporting Standards (IFRS) and lower selling prices.

Neptune, which is planning to ratchet up production capacity from 130,000kg/year to almost 500,000kg by 2014, said sales were up 3.1 percent to $4.29m Canadian dollars in the three-months to May 31, 2011.

Net losses were $1.26m compared with a net income of $494,000 in the same period last year.

Weak US dollar dents earnings

The fact that a large percentage of its sales were in US dollars, which then had to be translated back into Canadian dollars, was a major factor, said finance director Frédéric Harland.

“The deficit … was mainly due to an important decrease in the average US dollar/Canadian dollar exchange rate … as well as the IFRS adjustments made to stock-based compensation, and to the selling price reduction due to increased competition.”

However, bosses were focused on improving productivity, he said.

"The company is focusing on improving productivity by looking in multiple areas of the production. The expansion program that will take place in the next 12 months will also contribute to it.’’

Increased competition

Chief financial officer André Godin added: “Despite the increased competitiveness in the market especially in the pricing and the devaluation of the US currency, the company has managed to maintain growth in its revenues and usual gross margin levels.

“The IFRS adjustments had a negative impact on the three-month period ended May 31. [But] in the mid to long term, those negative adjustments should be regulated, as it is foreseen by the standards.”

While Neptune's initial focus had been on dietary supplements, its krill oil is now being used in several foods including yogurt, health bars and juices as well.