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Neptune continues to struggle
1 May 2015Canadian krill oil company Neptune has provided a business update. “Since taking over as CEO earlier this year, we have conducted a thorough review of our operations,” said Jim Hamilton, President and CEO of Neptune. “Much has been done to strengthen the Corporation and position it for the future. Our business has a solid foundation, built on […]
Canadian krill oil company Neptune has provided a business update.
“Since taking over as CEO earlier this year, we have conducted a thorough review of our operations,” said Jim Hamilton, President and CEO of Neptune. “Much has been done to strengthen the Corporation and position it for the future. Our business has a solid foundation, built on science, intellectual property and entrepreneurship. Moreover, as the krill oil pioneer, with a strong history and solid industry recognition, and based upon my discussions with customers I believe that their doors are very much open to us. We still have much work, but together with a committed management team and board, we are well positioned to resume our leadership role in the phospholipid omega-3 space and I am excited about the opportunities ahead.”
“Neptune’s Sherbrooke plant has a proven ability to produce at the preliminary targeted capacity of 150 metric tons annually and meet all product label specifications,” said Hamilton. “However, at that level we are seeing some product handling characteristics that are not fully in line with what all our customers expect. As a result, we are slowing the production process down to better deliver on expectations. Although this allows us to offer a superior product, it is temporarily resulting in higher production costs.”
Neptune said that a team, including third-party experts, is determining the cause of the production issue and identifying a longer-term, cost effective solution to enhance product attributes and increase output.
“We have engaged outside leading specialists, individuals I have personally worked with in the past, and directionally I am very confident as to where we are going. It is not unusual for a new production facility to experience such hurdles and we are making important progress to resolve the situation as quickly as possible.”
Based on preliminary, unaudited financial results for the fourth quarter ended February 28, 2015, Neptune said it expects revenues to be approximately $4.0 million. As a result of various non-recurring items, largely related to the plant issues, quarterly operational expenses are expected to be significantly higher than originally anticipated. Neptune will be reporting its fourth quarter results on May 27, 2015 after markets close.
“Our overriding objectives are to ensure customers receive a premium product and to optimize plant output in a cost effective manner as quickly as possible,” concluded Hamilton. “As a result of the lower production levels, sales and expenses for the first quarter ended May 31, 2015 are expected to be negatively impacted. However, we expect sales and expenses to improve as plant output and efficiencies increase.”
“Despite our present challenges, we continue to be confident in our business model and our growth prospects. Together with a committed management team and Board, we will drive growth by selling innovative products, building a more agile business and seizing new market opportunities.”