Production woes drag Cyanotech to loss

Cyanotech Corp, which produces nutrition and health products from microalgae on Hawaii island, posted a wider loss in its fiscal fourth quarter as several events curtailed its spirulina production.

The Kona-based company said Friday that its loss increased to just over $1 million, or 18 cents a share, from a loss of $274,000, or 5 cents a share, in the fiscal fourth quarter of 2017. Sales, however, rose 11.7 percent to $8.1 million from $7.3 million.

“Our fourth quarter was significantly impacted by a variety of unexpected events, which occurred in concert to have an adverse effect on our production of spirulina,” said Gerald Cysewski, founder and chief scientific officer for Cyanotech. “These events included fresh water supply restriction which lasted several months, and an unusually cool, cloudy and rainy winter, which led to the growth of small and difficult to harvest spirulina.”

Cysewski said the company responded to those production challenges at the beginning of April by undertaking a re-inoculation of its spirulina ponds, which is expected to allow the company to correct nutrient levels and stabilize production.

“There was no spirulina production during the re-inoculation process, which was completed in mid-May,” Cysewski said.

For the fiscal year, Cyanotech swung to a profit of $1 million, or 18 cents a share, from a loss of $1.2 million, or 21 cents a share, in fiscal 2017. Sales increased 6.5 percent to $34.1 million from $32 million. The higher sales were driven by a 13.6 percent increase of the company’s packaged Nutrex Hawaii products. The increase in packaged sales for both astaxanthin and spirulina was the result of continued growth through Costco and Amazon. Bulk sales, however, fell 23.3 percent because of the spirulina-related production declines experienced during the year.

“Cyanotech results for the year continue to reflect our focus on building our consumer brands, introducing them to a broader consumer market and maintaining a profitable mix of sales channels,” said new Cyanotech CEO Mawae Morton, who was promoted from president to CEO in January to replace Cysewski, who resumed his previous role as chief scientific officer. “Despite the spirulina production issues we experienced in the fourth quarter, this strategy enabled us to deliver positive top line and bottom line performance over the past fiscal year.”

Cyanotech’s stock was unchanged at $4.20 Friday. The financial results were reported before the market opened. Shares of the company are up 7.4 percent this year.