Blis Technologies posts after-tax profit increase
The Dunedin-founded probiotics company posted improved after-tax net profit of $800,000 — up on the previous year's $600,000 result — for the year to March 31. Revenue of $12.6million was 10% higher on the previous year while ebitda of $1 million was a 26% improvement on FY24.
Chairman Geoff Plunket and chief executive Scott Johnson said in the review that patents filed by the company's largest customer in Europe and a party associated with that customer became public in September last year.
Blis maintained the patent applications contained confidential information provided under earlier agreements. Since the public release of the patent filings, Blis had been in negotiation with its customer "to reach an acceptable outcome for Blis".
Both parties were working to conclude an agreement within the immediate future. An agreement would enable the parties to refocus on growing sales of Blis products in the market, they said.
The increased revenue was underpinned by solid growth across the company's finished product sales and modest growth in its business-to-business revenue.
Higher royalty revenue was partially offset by some softness in ingredient revenue from European customers. Growth was achieved in other ingredient markets.
The company sold both probiotic ingredients and finished product into the United States.
The US tariff regulations provided an exemption for bulk probiotic ingredient imports but the Blis-finished products for sale on Amazon US and US web store sales were subject to a general 10% tariff.
The tariff impacts, although not material to the overall company result, had resulted in an Amazon US and US web store price increase being implemented through April this year.
The company entered FY26 "with cautious optimism". While macroeconomic conditions remained mixed, demand for science-backed probiotics continued to grow, they said.
sally.rae@odt.co.nz
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To paraphrase former US President Bill Clinton: it's the economics, stupid. One big factor behind the rise, according to economists, is that New Zealand exports wholesale butter products and the price for this has soared internationally. As Infometrics economist and chief forecaster Gareth Kiernan explained, a 74% rise in international butter prices at Fonterra's Global Dairy Trade auctions between August 2023 and May this year has 'directly flowed through into retail prices within New Zealand'. What's behind that jump? Kiernan explains it 'reflects a mixture of demand and supply factors, including lower dairy production volumes in the US, Europe, South America, and China' as well as 'a sharp drop in Australian [dairy] production between 2021 and 2023 that has not been fully recovered from; and strong demand growth in Asia'. 'Weather events, including both drought and periods of excessive rainfall, have been a contributing factor to many of the supply issues overseas. 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'Because we have yet to see any dip in international prices, it's too early to be certain about the timing of any reversal in retail prices, so it might not be until late 2025 or early 2026 that supermarket butter prices start to ease a little from current highs.' Rabobank's Harvey agrees: 'We are not expecting the global price to rapidly decline in the next six to 12 months, but there'll be some pressure. Relief is on the horizon, but there won't be a dramatic decline'. If you look at the Global Dairy Trade (GDT) as a global indicator of prices, these have fallen marginally in recent months, but are still very high, Harvey explains. 'It becomes a question of when we will see some correction,' he adds. How that correction will happen also depends on several factors. 'It could be that customers just stop buying, because the price is too high, or a supplier response from manufacturers. You'll get a balance of that,' Harvey says. If it's a global issue, how can places like Costco sell cheaper butter than anywhere else? The question, Harvey says, gets complex when we try to do price comparisons across different geographies. 'There's nuance around the retail structure in each market and there's variability in the category itself,' he says, adding that there are 'excluding mechanisms' that could be at play. For example, some retailers could be buying on contract for a period of time, thus locking into a certain price for longer. West Auckland wholesaler Costco has put purchase limits on its Kirkland Signature butter, restricting customers to 30 blocks at a time. Photo / Grace Xin Yin Wu 'You're never going to get them all to line up and agree on a price, but the reality is consumers in all geographies are paying more for butter.' What other items on supermarket shelves could be set to spike in price? Rabobank's Harvey says products like cocoa and coffee beans are 'commodities to watch' because, among other factors, there are current shortages that could affect pricing. Canola oil is going through a similar cycle, he says. What can the Government do about this? Not much, apparently. Willis met with Fonterra chief Miles Hurrell this afternoon about the dairy giant's pricing model. As a result, Hurrell will publicly explain the different components of the price of butter, which Willis said will come later in the week. Willis did say the Fonterra CEO blamed supermarkets for prices being quite as high as they are. When asked whether anything raised in the meeting would lead to lower prices, Willis said, 'All roads lead back to supermarket competition. 'What Miles acknowledged, and what every New Zealander can see, is that supermarkets make choices about what margin they charge for butter. Now this is at the margin, it is a small proportion of the overall price that you pay, between 5% and 10% of the overall price shared between Fonterra and the retailer. 'What is clear is that different retailers make different decisions about what margins they charge,' Willis said. Speaking to the Herald before the meeting, Harvey said there's 'not much the Government can do' in the short term as the Beehive is largely unable to influence global pricing. There are some players along the supply chain who can have an impact, though. 'Retailers will look to trade down where they can. They are very mindful of this,' Harvey says, adding that we should expect to see more 'promotional activity' that customers can take advantage of. In summary Butter is expensive right now, but it's probably going to get worse before it gets better – and there isn't much anyone can do about it. That's good if you sell butter (or the raw ingredients used in production). For those who buy it as part of their weekly shop, it's something that's a lot harder to swallow.
