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PharmaZen reports record profit, brings forward plant expansion

Thursday 4th April 2019

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PharmaZen has brought forward development of a new blackcurrant processing facility after full-year sales jumped 72 percent and delivered a record $1.28 million profit for 2018.

Plant expansion in the first half of 2018 saw sales for the six months ended December almost match the $7.3 million reported for the entire 2017 year, the Christchurch-based health supplements maker says.

“Demand for both new and existing products has been exceptionally pleasing and well exceeded expectations,” chief executive Craig McIntosh said. “Ahead of this anticipated growth we strengthened our management team which means we are well placed to cope with continuing high levels of demand.”

That level of growth has enabled the company to separate its four processing systems at its Port Hills Road site into semi-autonomous facilities, improving efficiency, minimising downtime and making compliance easier.

The new blackcurrant plant, capable of processing 1,000 tonnes of fruit a year and originally scheduled for 2020, has also been brought forward.

“The original intention was that we would run botanical and marine products through the same facility until demand supported a separation of facilities,” the company says in its annual report. “This situation has come rather earlier than anticipated and we have purchased a specialist production line that will be dedicated to blackcurrants and other botanical products.”

The net profit reported today contrasts a $285,704 loss in calendar 2017. Sales rose to $12.6 million from $7.3 million and gross profit almost doubled to $5.01 million.

Costs rose to $3.3 million from $2.8 million the year before, driven by higher marketing, administration and depreciation charges.

No dividend was declared.

PharmaZen shares, listed on the USX Exchange, last traded at 11 cents and have almost doubled in the past year. That values the business at $24.1 million.

PharmaZen makes both plant and animal-based products and has invested heavily in the past five years to get its plants to world-scale.

It completed almost $7.6 million of capital projects in 2018, including the addition of 1,000 square-metres of processing space. The firm also increased its freeze-drying capacity by 75 percent with the installation of the biggest batch dryer in New Zealand and Australia.

While the company sees itself as an ingredient supplier, it is also starting a range of specialised retail-packaged consumer products to take advantage of the growing demand for traceability and provenance.

“For fast developing markets, such as China, it is of great focus. We, therefore, foresee a significant opportunity for a 100 percent New Zealand-made and New Zealand-sourced product range in these markets,” McIntosh said.

The company plans to launch the AiOra range in June. The 5th Quarter range, promoted as grass-fed "glandular nutritional therapies," will be launched in the third quarter.

PharmaZen says it is “extremely pleased” with early sales presentations for the products, which will only be offered in some Asia-Pacific markets.

Because the company is an ingredient supplier to others in its existing markets, “they will not be available in markets where we have significant existing presence such as North America. The company sees this as a long–term project and has very realistic expectations as to the rate of growth and is well aware of the required investment for success.”

(BusinessDesk)

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