Weider confident in future of joint care
Nutrition International, which yesterday reported a 9.8 percent
increase in sales of Q1 2006 driven by joint care brands.
Net sales for the company (doing business as Schiff Nutrition) were $48 million for the quarter, up from $43.7 million for the same period of last year. Its branded products alone increased 16.9 percent, thanks largely to the Move Free joint care brand.
But although net income was up 33 percent to $4.99 million, income from operations dropped to $3.77 million, from $4.96m last year.
"As expected, we experienced an erosion in our gross margin primarily due to the ongoing higher raw material costs in a price competitive market," said president and CEO Bruce Wood.
The cost of goods sold rose by a disproportionate 31 percent to $35 million, compared to the sales increase.
For companies in the joint health category, glucosamine prices have been a cause for concern in recent times, due to duties imposed on shrimps - the main source of the ingredient - imported from Asia and South America. These made shrimp farming less profitable, causing some farmers to turn away from the business and leading to a shortage.
By the end of 2004, prices were reported to be around four times their level in February of that year - $20 compared to $5.
Wood said that the positive results of the NIH Glucosamin/Chondroitin Arthritis Intervention Trail joint care study were encouraging for the company. "This seminal study, coupled with positive results contained in the abstract from the recently completed European Glucosamine Unum In Die Efficacy Trial, give us reason to remain confident in the long-term potential of the joint care category," he said.
In June, Weider announced the sale of Haleko, Europe's biggest sports nutrition business, to Croatian holding company Atlantic Grupa for around $15 million - a transaction that left the Utah company's interest in Europe "pretty minimal".
But chief financial officer Joseph Baty told NutraIngredients-USA.com that it is interested in acquisitions that "complement the Schiff business and are clearly synergistic with ongoing operations and marketing strategies".
As of August 31, Weider had short term cash and cash equivalents of $21.2 million - almost double the $11.36 it had at the same point last year. It had also reduced its short term debt from $3.02 million to $0.25 million.
