September 28, 2007

Food safety company registers 25-percent increase in net income

Neogen Corporation, a US, Michigan-based company that manufactures food safety diagnostic drugs and other supplies, announced a 25-percent increase in net income over the first quarter the previous year to US$3.01 million 

Adjusted for a 3-for-2 stock split, net income per share was US$0.21 in the first quarter, compared to US$0.17 per share for the same period in the prior year.

First quarter revenues rose 13 percent from the previous year's US$20.22 million to US$22.91 million, a record high for the company.

The first quarter marked the 58th consecutive profitable quarter from operations for the 25-year-old company, and was the 62nd of the past 67 quarters when Neogen reported revenue increases as compared with the previous year.

James Herbert, Neogen's chief executive officer and chairman, said the company's first quarter was a great start for the new fiscal year and the company has delivered on the trust earned from shareholders and customers

During the quarter, sales were increased for most product groups, indicating both market growth and market share of the company. The company expects the trend to continue.

The first quarter also saw Neogen continue its progress in controlling costs to help improve operating results. The company's operating income increased 27 percent in the first quarter of FY 2008 to US$4.45 million while gross margin as a percentage of sales increased to 53.7 percent in the current quarter, up from 51 percent in the same quarter the year before. 

Cost-saving programmes started the last fiscal year, and during this year's first quarter, contributed to the company's increase in operating income, said Lon Bohannon, Neogen's president and chief operating officer.

The company also experienced a favorable mix of high margin product sales in the first quarter that further contributed to the dramatic increase in gross margin and operating profit, he added.