Balchem aims for modest earnings growth
the first quarter of 2003, although sales in its Encapsulated
products segment dropped, owing to the current difficult economy
for the food industry.
Balchem reported a small rise in net sales, up 3 per cent overall during the first quarter of 2003, but said it was pleased with results in light of the continued difficult economic environment. Net earnings at the New York-based firm increased 17 per cent.
While the ARC Specialty Products segment generated net sales of $5.9 million, up 11.1 per cent over the comparable quarter in 2002, net sales in the Encapsulated/Nutritional Products segment decreased 3.4 per cent to $6.1million, said the firm, although figures were up slightly from the fourth quarter of 2002.
Balchem attributed weak sales in the unit, which provides microencapsulation solutions to the nutraceutical industry, to conservative customer purchasing patterns, already seen in the fourth quarter, and delays in the timing of new product launches by customers owing to the intense competition among food retailers in the current economy. However the international market saw strong growth due to a new product introduced into the confectionery industry.
Sales of Reashure for the animal health and nutrition industry remained flat, while net sales in the Unencapsulated Feed Supplements segment grew to $2.7million, up 2 per cent, over the comparable period in 2002, driven by improved volume in all product lines.
Consolidated gross profit in the quarter ended March 31, 2003 improved $0.36 million, or 6.7 per cent, over last year's quarter, due largely to growth in sales volume and favorable product mix. Also cash flow from operations continued to be strong in the quarter, said Balchem, allowing it to reduce long term debt by $0.4 million.
Dino A. Rossi, president and chief executive officer of Balchem, said outlook for the year continues to be moderate earnings growth. "Having built scale in 2002, we are now focused on reducing costs and optimizing logistics and raw materials across business segments as we exploit our technology base," added Rossi.
He continued that strength in the ARC Specialty Products segment should continue, while the Encapsulated/Nutritional segment would likely be challenged by the US economy for another quarter due to current economic situations in both the dairy and domestic food markets.