Martek CEO Steve Dubin attributed the loss to the “de-stocking of inventory” by its infant formula customers. The $77.8 million in Q3 revenues fell short of the $88.4 million total posted in 2008, despite an impressive 41% quarter-over-quarter increase in non-infant formula product sales.
Martek’s non-infant formula products, which include DHA formulas for pregnant and nursing mothers, helped partially offset the inventory de-stocking effect with $10.6 million in sales for the quarter. However, the segment represents just 14% of Martek’s total product sales, and the increase was not enough to make up for the company’s infant formula sales declines. Martek generated $2.8 million in contract manufacturing revenues during its fiscal third quarter, which was down from the $4.9 million posted during the third quarter in 2008. The decline was due to a planned reduction in the scope of long-term contract manufacturing activities, according to a company release. The remaining $64.4 million was generated by the company’s infant formula supply business.
Dubin remains optimistic that Martek will see positive growth again soon as customers return to their old spending habits in 2010. “The de-stocking issue should be behind us, and our growing non-infant formula business—coupled with an expected resumption in growth in our infant formula business—should lay a solid foundation for 2010,” he said in a prepared statement.
Despite this optimism, Martek’s most recent revenue projections predict total 2009 revenues to fall between $345 million and $350 million. That has been adjusted down from its June 2009 Q2 guidance, which predicted full-year totals between $350 million and $355 million. The company attributes its lower 2009 totals to cost management strategies implemented to address economic challenges.
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