Net sales for the six month period amounted to SEK 51.2m (€5.5m) up by 24 per cent from last year, with sales from Europe increasing by some SEK 16m (€1.7m). The firm also posted operating profit of SEK 2.6m (€0.38m), up from last year's SEK 0.1m.
Despite the fall in Asia, the profitability tide appears to have truly turned for the firm which had struggled in the past to stay out of the red as operating profit took a brief nose dive in 2005.
The company remained positive about the future and lost sales in Japan could be stemmed if a trial of a probiotic straw currently underway proves successful. Probiotics in oral health have also been launched in Italy and Spain under an agreement with Sunstar, and a launch in France is planned later this year.
BioGaia develops, markets and sells probiotic products primarily based on the lactic acid bacterium Lactobacillus reuteri (Reuteri), and has also developed delivery systems, such as straws and caps containing probiotics, that make it possible to create probiotic products with a long shelf life.
The company said that its Reuteri drops and oral health products, such as chewing gums and lozenges, accounted for most of the period's sales growth.
The total sales doubled in Europe, but fell by 38 per cent in Asia. The drop in Asia was largely due to a lump-sum payment in the previous year, BioGaia said, and decreased orders from two Japanese customers.
The fall in orders were "due to owner and organisational changes at these customers," it said, adding that it was "actively working to recover lost sales."
Trial sales have begun in Japan of soy beverages with BioGaia's probiotic straw and will continue this year. A decision on whether or not to launch is expected to take place by the end of the year. The cost of the Japanese venture amounted to SEK 3.2 million in the first half of 2007.
The trial has been marked up as carrying a potential "market risk," although the company said there is a strong interest in these products in the market, relatively large volumes are needed to achieve good profitability.
Bio Gaia is confident it will be able to sustain its profitability by increasing sales to existing customers and developing business with new customers.
Other agreements BioGaia signed in the second quarter include another deal with Sunstar to distribute oral health products in 100 countries starting next year, and an agreement with Earth Biochemical to sell oil drops containing Reuteri for dogs in Japan.
For the second half of the year the company is hoping to see its oral health products distributed in Finland and South Africa and its probiotic drops in Brazil, Greece and Mexico.
In 2005 BioGaia blamed delayed contracts for failing to make a profit.
