PharmaZen lifts profit in face of high kiwi

PharmaZen says benefits of rising export volumes eroded by high kiwi

By Paul McBeth

July 30 (BusinessDesk) – PharmaZen Ltd., the biotechnology company that supplies animal and health powder products, said the high kiwi dollar had eroded the benefits of increased export volumes.

The Christchurch-based company reported a profit before tax of $210,000 in the six months ended June 30, compared to $157,000 last year. Turnover grew 6.4% to $2.98 million after it boosted exports to Japan and North America by 20% from the same period a year ago.

“Our increased volumes have been largely offset by the high New Zealand dollar which has averaged over 0.70 against the U.S. dollar as opposed to 0.57 for the same period 2009,” chief executive Craig McIntosh said in a statement. “Forward orders for the second half of 2010 remain strong and the company has several product development initiatives that are looking extremely promising.”

Exporters have been decrying the strength of the kiwi since it bounced back through the second half of last year, though over PharmaZen’s period it shed 5.7%. Reserve Bank Governor Alan Bollard gave the currency a knock when he hiked the official cash rate 25 basis points to 3% yesterday, saying the kiwi’s strength was inconsistent with the economic outlook.

The kiwi fell to 72.43 U.S. cents from 72.74 cents yesterday, and dropped to 62.85 yen from 63.36 yen, and Bank of New Zealand strategist Mike Jones expects the currency will continue to hold up amid a weak outlook for the U.S. dollar.

PharmaZen said its profitability will continue to depend on the strength of the kiwi, though it was pleased with consumer demand amid the unfavourable exchange rate.

McIntosh said further improvement in turnover was likely through the rest of the year, with Europe the only market still struggling.

The increase in first-half profitability comes after PharmaZen’s full-year net profit slumped 60% to $127,000 in the 12 months through Dec. 31.

The shares, which trade on the Unlisted platform, last changed hands at 3.1 cents.

(BusinessDesk)

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