Innophos' sales down 1% for 2014 on supply bottleneck, soft demand

19-Feb-2015 - Last updated on 19-Feb-2015 at 16:24 GMT

Specialty phosphate producer Innophos experienced a sales decline both for its fourth quarter of 2014 and well as for the entire year. Soft market conditions were to blame as well as a continued issue with the supply of purified phosphoric acid (PPA), the company’s key feedstock. Sales of nutritional products and operational improvements were bright spots, though, said CEO Randy Gress.

“Our improved execution during the year, which led to better operating performance and higher cash flow generation, despite continued headwinds from soft market demand and second half PPA supply issues hurting our top-line performance. Our 2014 operating income improved by $23 million and our specialty phosphates operating income margins increased by 310 basis points on improved operating performance at our Coatzacoalcos, Mexico facility,” Gress said.

Gress said the PPA supply issue arose as a result of an extended maintenance outage at the company’s raw material supplier. That issue has been resolved and the company expects phosphate sales to rebound in 2015.

Good news in nutrition

Innophos, based in Cranbury, NJ, sells a variety of phosphates for industrial uses and nutritional products and offers other dietary supplement and food ingredients. The nutritional side was a strong performer for the company in the fourth quarter.

“We also saw recovery in our nutrition business during the fourth quarter, with sales up 14% year-over-year and 16% sequentially, as our customers finally resolved their issues for importing into China. Cal-Rise, our low sodium baking product, also showed volume growth in the quarter, up 5% year-over-year and up 10% for full year 2014 versus 2013,” Gress said in an earnings call with analysts that was transcripted on the site seekingalpha.com.

Nutrition might have been able to contribute even more, Gress said, but for the dockworkers slowdown in West Coast ports. Despite the resolution of import issues in China on the part of the company’s customers, the port slowdown depressed exports by 8%, he said.

The company also introduced a new nutrition product in 2014—NutraTab, a dietary supplement and pharmaceutical excipient that is a blend of tricalcium phosphate with guar gum. The product is meant for use in chewable tablets and high calcium supplements.

Earning details

For the fourth quarter, net sales came in at $194 million, down 1% compared to the same period in 2013. Specialty phosphate sales declined 5% year-over-year, with prices down 4% and volumes down 1% amid continued soft market conditions. For the year, sales were $839 million, down 1% from 2013. Specialty phosphates sales declined 2% year-over-year on lower prices and flat volumes due to soft market conditions.