Dunedin-based probiotics company Blis Technologies has posted a 10% increase in revenue for the six months to September 30.
In its half-year results released yesterday, the company said that included a stock buy-back associated with the withdrawal from the Canadian market. Excluding that one-time revenue adjustment, underlying revenue growth was 17%.
A $1.2 million ebitda loss for the interim period was posted; after deducting the one-off costs, the underlying ebitda loss was $800,000, an improvement on the $1.5 million loss reported in the previous half year.
The company said the main focus in the half-year period had been to implement the strategy reset announced in July last year and to grow revenue to return to a profitable trading position.
It was prioritising growth of its ingredients business through business-to-business (B2B) revenue opportunities and by working with partners. The relationship Blis established in July 2021 with Swedish probiotic company Probi represented a "‘blueprint" for the new strategy.
Royalty income from Probi began accruing at the end of the reporting period as it began the first supply of product manufactured by itself under licence to its existing customer base.
While strong revenue growth was achieved in the European market with revenue returning to pre-Covid-19 levels, sales performance in the key United States market was again disappointing with a further decline in revenue, it said in an update to the market.
Revenue in North America dropped 57% compared with the same period last year, attributable to weak market conditions, uncertainty in the current inflationary environment and overstocking by existing customers affected overall ingredient ordering patterns. Blis’ distributor had been particularly impacted by the delayed ordering patterns of several large customers.
Additionally, Probi was transitioning its customers from ingredient supplied through Blis’ current distributer to its own manufactured product. North America was a key sales region for Probi and the company would actively target new business with their own production from the next quarter.
For Blis, that represented a transition of ingredient revenue to royalty revenue.
In September, Blis senior management visited Probi’s head office in Lund to meet its wider management team and visit its research facilities. Probi chief executive Tom Ronnlund had visited New Zealand the previous month, and met Blis staff across the various operational areas.
Those visits had further reinforced the positive collaboration between the companies, the update said.
There remained market uncertainty based on the economic conditions in many markets and those would be closely monitored, particularly in the US.
Blis was encouraged by the early B2B leads the company had established, however it recognised sales cycles could be long within the industry so the full benefit of that revised focus would take time to flow through.
"Our narrower B2B mix with a focus on profitable growth has removed much of the pressure for investment to open new markets, providing a more sustainable position for the company."
Those changes were part of the board and management’s focus on a return to profitability which Blis remained confident of in the new financial year, once one-off and transition costs were washed through.
