Good growth at Balchem's medical products segment has helped offset a continuing decline in its encapsulated products, sold to nutritional and food industries, although overall interim sales are still down by 1.3 per cent.
Despite the long-term decline in the US dairy market, Balchem has failed to buffer the impact with operating profit falling 23.3 per cent in the second quarter to $1.69 million.
While sales in ARC Specialty Products saw record growth in the quarter, up 16.6 per cent, the Encapsulated/Nutritional Products segment slowed by 25.7 per cent from the prior year comparable quarter, blamed on weak prices in US food and dairy markets.
The downward trend in the US dairy market has led to reduced spending on existing product lines and new product launches, impacting both Balchem's food and animal nutrition segments.
The company did however manage to reduce long-term debt over the period (by $0.4 million) and incurred $0.6 million of capital projects focused on growth areas of the business.
Net earnings for the first half are down 7.4 per cent on last year.
Dino A. Rossi, president and CEO of Balchem, said signs of volume improvement in the domestic food sector and increasing milk prices should improve results at Encapsulated products but not in time to bring full year results level to those of 2002. Earnings for the year will be flat compared to 2002.