Galaxy Nutritional Foods has reported net profits of $149,994 (€172,018) for the third quarter of 2001/2002, a welcome return to the black after losses of $2,486,808 a year earlier.
The producer of plant-based dairy alternatives said that the improvement in profits had come despite an 8 per cent drop in sales from $11,258,310 to $10,400,300. Operating profits were $985,938 compared to a loss of $1,450,002 in the previous year.
The rise in profits was due to a number of factors, the company said, including a decrease in non-cash compensation related to stock loans and warrants, increased efficiencies of new production equipment, significant savings from manufacturing restructuring initiatives and strengthened internal controls.
The company said that it expected sales to rise now that these restructuring measures have been put in place. Angelo Morini, Galaxy's chairman, president and CEO, said: "During the past year, there has been a sharp increase in the demand for our products. In anticipation of this growth, we invested millions of dollars in purchasing new, state-of-the-art production equipment for an additional six production lines to meet this demand and much more. These new lines enable us to produce new products, increase the production capacity of existing products as well as improve quality."
He continued: "Unfortunately, the installation of the equipment was significantly delayed due to late shipments by equipment manufacturers and unanticipated internal problems with machine configurations. In the past few months, most of this new equipment has become fully operational. Since we were forced to operate for many months with limited production capacity during a time of increased demand, we experienced excess overhead costs and downtime during the first six months of fiscal 2002, which resulted in increased costs and reduced cash flows."
He added that this had also affected purchasing ability and sales growth, but that sales would have grown significantly if the new equipment had been operational. "Naturally, we are very pleased to report a profit for the third quarter and expect that with the increased efficiencies and capacity of the new production equipment we are starting to generate, significant savings from manufacturing restructuring initiatives and strengthened internal controls, our recovery and growth should be strong," Morini concluded.