Neptune Poised to Open Krill Oil Production Facility in Spring

In November 2012, a fatal explosion destroyed Neptune's plant, stymieing its growth and prompting a government investigation.

Laval, Québec, CANADANeptune Technologies & Bioressources Inc., the supplier of krill oil for use in dietary supplements, said Tuesday that its production facility is in the "final stages" of reconstruction and should open in the spring.

The company needs final approvals from government authorities to open the Sherbrooke facility, which is estimated to cost  roughly $43 million.

In November 2012, a fatal explosion destroyed Neptune's plant, stymieing its growth and prompting a government investigation. 

In a third-quarter earnings announcement today, Neptune said the facility should open near the beginning of its next fiscal year, which begins on March 1.

The plant will have capacity to produce more than 150 metric tons of krill oil annually. Neptune also has reached a manufacturing and supply agreement with Rimfrost that will provide Neptune an additional 800 metric tons of krill oil over three years.

In spite of the plant explosion, Neptune said it has been able to maintain a significant portion of its revenues through margin concessions and by selling commodity krill oil.

In the three months ended Nov. 30, 2013, the company posted a net loss of $10.44 million on consolidated revenues of $4.4 million. Those results compare to a year-ago quarterly loss of $12.44 million on revenues of $7.03 million.

Year over year, nutraceutical revenues fell from $6.6 million to $4.37 million.

Last month, Neptune announced settlement agreements with Aker BioMarine AS and its subsidiaries as well as a separate "settlement term sheet" with Enzymotec Limited that nearly resolves litigation over its patents before the U.S. International Trade Commission.

The plant explosion and litigation have weighed on Neptune's gross margins and earnings before interest, taxes, depreciation and amortization (EBITDA).

Neptune posted adjusted EBITDA of negative $5.9 million, compared to negative EBITDA of $0.7 million in the prior-year period. 

Henri Harland, president and CEO of Neptune, acknowledged challenges over the past year but said Neptune is coming out of the woods.

"The Rimfrost manufacturing and supply agreement, together with the anticipated opening of the Sherbrooke facility, puts us in a strong position to meet future demand expectations as the omega-3 nutraceutical market continues to grow and we extend our reach," he said in a statement.

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