PharmaZen annual profit jumps on lower dollar

Monday 4th April 2016

PharmaZen, the Christchurch-based animal and human nutrition manufacturer, saw profits jump in 2015 off the back of a lower New Zealand dollar as it ramped up spending on research and development.

While sales rose 5.3 percent to $7.1 million for calendar 2015 from $6.7 million in 2014, gross profit increased by 35 percent to $2.8 million from $1.9 million, according to the company's annual report. PharmaZen has in previous years bemoaned the high value of the New Zealand dollar and described its weakness in 2015 as "a welcome respite". However investors were warned that some of the currency gains "were offset by increases in raw material prices". PharmaZen posted a post-tax surplus of $632,471 compared to loss of $3,961 for 2015.

Spending on research and development more than doubled to $130,383 from $56,824 a year earlier. Spending in almost all other areas was broadly flat, with consultancy fees down by almost a quarter to $44,746 from $61,206. Payments to directors rose to $49,375 from $40,000 in 2014.

PharmaZen's directors said profits weren't just driven by the weakening New Zealand dollar, but by improvements to capacity and production efficiencies delivered by a new freeze dryer and vacuum drying plant. They said the strong core business is carrying the costs of the development projects.

The company is scheduled to move all post-drying facilities into a purpose-built site which meets the latest manufacturing standards. The directors said meeting such standards is vital and 2015 saw the first instance of the company's goods being rejected from a market because of changing regulations.

Shares in PharmaZen are traded on the Unlisted platform and are currently valued at 5 cents. They were last traded on March 31.

(BusinessDesk)

BusinessDesk.co.nz

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