Blis forecasts doubling in full-year sales

Blis Technologies [NZX: BLT], the probiotics manufacturer, which has replaced its chief executive after nine years, expects to double annual sales and achieve a small pretax surplus after narrowing its first-half loss.

The loss was $405,000 in the six months ended September 30, from a loss of $808,000 a year earlier, the Dunedin-based company said in a statement. Sales rose to $2.7 million from $1.1 million.

Blis, which was set up to commercialise probiotic bacteria for use in consumer products, first listed in 2001 and its shares have never again scaled the heights of its first few weeks of trading, when they reached 79.7c. It now has 1.1 billion shares on issue, which last traded at 2.7c, valuing the company at $29.8 million. Today the company outlined a five-point strategy to drive dietary and food ingredient revenue, develop new products, expand online sales, forge long-term strategic partnerships and continue seeking regulatory approvals and protection of its intellectual property.

"This half-year result demonstrates a work in progress with a positive outlook," chairman Peter Fennessy said. "We have strategies in place, we are being disciplined about the way growth is being managed, we will be subject to the usual unexpected glitches that arise from time to time in manufacturing and exporting and we are developing a company that has resilience and adaptability to be able to deal with those events."

One unexpected glitch was having to take a $350,000 provision against its first-half results for a speckled discolouration of a lozenge product line in Europe. A particular formulation for one European customer found extreme humidity created speckling of the product, which "remains safe although cosmetically unacceptable," it said this month.

Its full-year guidance is dependent on the final cost of replacing the discoloured product in Europe not exceeding the provision, it said today. Assuming costs come in as expected, revenue in the 12 months ending March 31, 2016, is forecast to jump to $5.3 million from $2.5 million last year. It expects to record "a small full-year surplus" on an earnings before interest, tax, depreciation and amortisation basis.

Among highlights in the first half, it cited Health Canada approvals for specific label claims on products containing its BLIS K12 formula, higher sales from its North American and European distributors, and appointment of staff in quality control, business development, research and development. Challenges in the half included increased costs, regulatory changes that were slowing the product launches in markets including China, and quality control.

The company won't pay a dividend and again paid no tax. Expenses, including the provision, jumped 61% to $3.1 million.

The shares have climbed 42% this year.

(BusinessDesk)

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