The company, which develops docosahexaenoic acid (DHA) and arachidonic acid (ARA) from microalgae, has seen revenues surge since the US Food and Drug Administration approved the safety of its oils for use in infant formula in 2001, reporting its first profitable quarter this time last year.
With all of the leading formula makers now licensees of the company's oils, and many of these introducing new products in 2002, Martek saw 2003 revenues more than double on the previous year, from $46.1 million in 2002 to $114.7 million.
US market share for infant formula containing Martek's oils grew from less than 10 per cent in 2002 to greater than 40 per cent, said the firm's CEO Henry Linsert yesterday. Almost 90 per cent of Martek's fourth quarter revenues was generated by sales of DHA and ARA to Mead Johnson, Wyeth, Abbott Laboratories and Nestle.
Margins also improved, up from 35 per cent to 40 per cent in 2003, helped by lower ARA costs from DSM, Martek's third party manufacturer of ARA oil, producing it at a plant in Italy. DSM is expected to begin ARA production in the US early next year, thought to reduce the impact of currency fluctuations and other factors that could impact the production at any one plant.
Operating expenses of $1.9 million, up significantly on the previous year (by $1.5 million) will continue to rise with further plant expansion underway to meet growing demand for Martek's products.
Earlier this year the company bought FermPro Manufacturing's Kingstree facility and has begun work to expand the plant, at a cost of around $120 million over the next 12-18 months. This is expected to "more than triple current capactiy",according to Linsert.