Demand helps hold up profits
Biotechnology company PharmaZen has reported a 24 per cent lift in net profit for the full year to December 31, despite a strong Kiwi dollar squeezing margins on its exports.
The company, which manufactures and markets specialised dietary and health products for animals, reported net profit of $436,000 compared to $351,000 for the previous year.
Chief executive Craig McIntosh said the company was pleased with its results.
"Given the circumstances we're pretty happy.
"It's really difficult trading . . . still with the dollar the way it is, it is difficult and it's not likely to ease up anytime soon.
"To be able to keep on making money in this sort of environment is a pretty good sign for the future."
The company exports more than 90 per cent of its products.
"The demand is still really good, it's just that selling things out of New Zealand at the moment, the margin's not good."
Many of the company's products had overseas competition which constrained the company's ability to increase prices as the New Zealand dollar gained strength.
Increased production and more efficient production had helped improve PharmaZen's bottom line.
McIntosh said the company would continue to look for ways to become more efficient, although it was already quite a lean operation.
By mid-year the company expected to use biodiesel and a waste oil burner to eliminate the need for electrical water heating, which would result in a significant cost saving.
PharmaZen's $1.6 million 1000 square metre expansion of its main Port Hills Rd base was 80 per cent complete, McIntosh said. That would allow the company to expand its dry-side production facilities.
The land for the expansion had had to be remediated by excavating 1000 square metres, five metres deep, and filling it with crushed concrete.
Building time had run a little bit longer than planned but it had not run much over budget and would be finished by the end of April, McIntosh said.
The company recorded turnover of $6,685,972 for the year, compared with turnover of $6,602,187 for the previous period.
The company invested nearly $900,000 in capital projects during the year, including installing a co-generation unit which will enable it to run the plant without a mains power connection.
It had also completed two major research projects with the University of Auckland around new products which would mitigate the risk of a connection between heart problems and calcium-based health products.
PharmaZen has about 24 staff and its annual meeting will be held in Dunedin, on May 2.
The company's shares last traded at about 5 cents a share through the Unlisted securities trading platform.