Synutra International posts fiscal 4th-quarter profit, reversing a loss

Synutra posts 4Q profit, reversing year-ago loss

NEW YORK — China-based baby formula maker Synutra International Inc. on Wednesday posted a fiscal fourth-quarter profit, compared with a loss a year earlier, as its sales rose and it cut expenses.

For the three months that ended March 31, the company, based in Qingdao, China, said its net income attributable to common shareholders was $9.1 million, or 17 cents per share, compared with a loss of $17.2 million, or 32 cents per share, a year earlier.

Its revenue rose 13 percent to $82.4 million, from $72.7 million last year. The company’s branded powdered formula segment took in $69.8 million, or 85 percent of net sales. Other products, mainly surplus milk powder sold to industrial customers, totaled $11.6 million.

During the quarter, a federal court sent back to China several product liability claims from about 100 Chinese families, stemming from alleged contamination of the company’s formula with melamine, a chemical commonly used as an industrial component in plastics, adhesives, countertops.

The incident in question took place in late 2008 and led to a recall of potentially tainted formula.

Synutra, which also has offices in Rockville, Md., cut its quarterly advertising and promotion expenses 78 percent to $6.6 million from $30.2 million.

That mainly reflected a shift toward promotional and educational activities in communities, medical facilities and health care clinics and away from a historical reliance on aggressive advertising and promotional campaigns.

The cut more than offset a 7 percent increase in selling and distribution expenses to $11.5 million, and a 45 percent hike in general and administrative expenses to $9.5 million.

The company’s cost of sales fell 12 percent to $43.5 million.

Chairman and CEO Liang Zhang said the results reflected “significant operational improvements” implemented over the past year and “a more normalized market environment.”

For the full fiscal year, the company posted a loss of $24.6 million, or 46 cents per share, narrowing from a loss of $100.5 million, or $1.86 per share, last year.