Forbes sales slip post Phyto-Source disposal
of non-branded phytosterol, Forbes Medi-Tech has revealed a
projected revenue cut of up to two-thirds for 2006, but has
nonetheless posted modest year-to-date profits.
The March sale of the Canadian life sciences company's profitable sterol manufacturing interest, the Phyto-Source joint venture, marked a profound change of course for Forbes. The company, based in Vancouver, announced in February it would be redirecting the net proceeds of the sale towards its pharmaceutical and nutraceutical development programs.
Forbes' 2006 revenue guidance is between C$7m and $7.5m, down from $21m in revenue for 2005.
Sales of Reducol and other value added sterol products only accounted for approximately $3.9m of Forbes's revenue last year. The majority of remaining revenue was attributable to Forbes' share of Phyto-Source.
Despite the significant short term losses associated with forgoing non-branded sterol sales, Forbes reported a first-quarter profit of $3.3m - up from a $2.5m loss for the same period in 2005.
However the company explained this as due to the proceeds of the sale, to Chusei Oil Co. Forbes recognized a $6 million gain on the sale of itsinterest in Phyto-Source, Darren Seed, manager of investor relations told NutraIngredients-USA.com.
The decision to sell the Phyto-Source share was a return to the core business strategy of developing and marketing a continuum of branded products for the prevention and treatment of cardiovascular disease, said Charles Butt, president and CEO of Forbes Medi-Tech, in March.
Forbes's dramatic structural changes in the first quarter indicate that the company is banking on the future success of Reducol.
Its anticipated 2006 revenue growth is largely based on contracted and forecasted sales of Reducol for functional food and dietary supplement markets.
"Moving forward, we will continue to build revenue from our value-added ingredient business with cholesterol-lowering Reducol at the forefront," said Butt.
Based on a body of research, Forbes Medi-Tech says that, in combination with a prudent diet, consumption of products containing the recommended amount of Reducol may help lower a person's LDL cholesterol by up to 24 per cent.
The UK's largest retailer, Tesco Stores Ltd., launched a range of Reducol-based dairy products in December 2005.
