Neptune sales up, Nestle deal on track
sales for its second quarter, as the firm continues development
work with Nestle and Yoplait on its flagship krill oil product.
Neptune Krill Oil (NKO), a lipid derived from the planktonic family of crustacean, is rich in omega-3 as well as phospholipids and antioxidants. It was originally launched at the end of 2003 for the North American supplements market, where it has established a strong presence. The company this week reported an 11 percent increase in total sales for the quarter ended November 30 2007, pushing revenue up to $2.2m, compared to $1.9m last year. Revenue for the six month period was up to $4.3m, compared to $3.5m last year. The company's VP of finance and administration André Godin said: "Neptune increased its sales volume beyond that to an estimated 28 percent for the second quarter and 36 percent for the first six months compared to the same periods last year." "The increased sales volume is not fully reflected in the increase in total revenues, because of the effect of the recent devaluation in the American dollar on Canadian exporters such as Neptune," he said. The firm recorded an EBITDA loss of $1.6m during the second quarter, compared to a loss of $448,000 last year. The loss for the six-month period was $2.6m. According to Godin, however, "most of the expenses generating the additional loss should be non-recurring". The firm said it is continuing in its business strategy to gain a strong foothold in the growing health and wellness market. One of its main objectives, it said, is to pursue this goal through collaborations with leading international firms. To this end, the first half of the fiscal year saw Neptune teaming up with food giant Nestle to jointly research the benefits of krill oil. The companies have not disclosed the precise areas of benefit to be explored, beyond saying they will be on "exceptionally prevalent conditions affecting the worldwide adult population". But Neptune has previously reported positive results for studies looking at its potential in cognitive function, particularly adult Attention Deficit Hyperactivity Disorder (ADHD). The company claims that participants in a pilot study improved their ability to concentrate and their working capacity by an average of 60.2 percent over the course of the trial. It has also studied its ability to help reduce LDL 'bad' cholesterol. The procedure for a development and license agreement between Neptune and Nestle upon successful completion of the research is built into the firms' agreement. Neptune this week said that "clinical research and product development efforts are progressing as expected". Pending such a deal to help it break into foods with the support of a major multinational, Neptune has developed formats to aid NKO's use in food formulations. For instance, in March it said it had overcome barriers to incorporate NKO in custards, in alliance with Terepia. NKO is also to be used in a range of dairy products marketed by Yoplait, the company announced in June. The products will be clinically tested for their effect on chronic health conditions. Yoplait will then launch those products that secure approval in strategically chosen pilot markets to begin with. Neptune will receive an upfront fee for the supply of NKO, as well as milestone payments and distribution royalties to follow. The firm again confirmed that clinical studies and product development are progressing "as planned".
