Low dairy prices hurt Balchem’s first quarter
The New York-based company released its financial report this week for the first quarter ending March 31.
The company saw a 6.7% decrease in net sales to $135.1m, compared to the first quarter of 2015, and a drop in net earnings from $15.17m in the first quarter of 2015 to $11.89m for the first quarter of 2016.
The gross margin moved from $43.1m in 2015 to $42.8m in 2016, while operating expenses increased, the company reported. The earnings from operations fell from about $25m to $19.97m.
“The macroeconomic headwinds continue to present top-line challenges, particularly from the oil and gas markets in our industrial products segment and current low milk and milk protein prices in our animal nutrition and health segment,” said Ted Harris, company president and CEO.
The adjusted net earnings moved from $19.6m in 2015 to $18.4m in 2016, said the company. And, the adjusted EBITDA moved from $36.1m to $35.5m for 2016.
Dairy sector challenges
Segment sales for animal nutrition and health dropped by 8.1% to $39.2m, reported the company. However, there was a 7.1% increase in volumes compared to the same quarter in 2015 based on global monogastric and ruminant species volumes.
The company’s rumen-protected choline product continues to see market expansion, Balchem reported. “Other nutritional products are still being challenged by lower milk and milk protein prices,” it added.
Sale reductions came from products selling at lower prices in the monogastric markets based on dampened raw material cost, it said. Additionally, an unfavorable product mix particularly hampered the ruminant products.
Segment earnings from operations fell by 23.2% to about $6.5m for the quarter, again effected by lower sales and poor product mix, and slightly offset by decreased prices for raw materials, said the company. However, the earnings improved 4.6% from the last quarter of 2015.
Additionally, the company said, it has recently announced a partnership with BASF to generate new feed efficiency and health products for the swine industry.
The human nutrition and health segment had a record first quarter with sales of $71.6m, reported Balchem. It marked an increase of 5.6% or $3.8m from the same quarter in 2015.
