Ampac Fine Chemicals struggles in Q3

By Nick Taylor

- Last updated on GMT

Related tags Ampac fine chemicals Central nervous system Nervous system

Ampac Fine Chemicals revenues fell by 20 per cent in Q3 as a result of a customer scaling back their order for central nervous system (CNS) products.

The company’s challenging 2009 looks set to continue. Revenues from CNS products have declined by 41 per cent in the first nine months of its fiscal 2009 and Ampac has said that the client’s order will remain reduced until the 2010 calendar year.

As a result of this reduced order, and various other factors, the company recorded an $800,000 (€556,000) operating loss in Q3. Ampac has now made a $400,000 operating loss in the first nine months of its fiscal year, compared to a profit of $9.4m in the corresponding period of 2008.

The difficulties in fiscal 2009 have been compounded by problems attempting to scale up production and convert to continuous processing. These issues are now believed to be resolved but their effect on fiscal 2009 has already been felt.

In addition to these problems Ampac has also faced a 22 per cent decline in revenues from oncology products in the first three quarters.

These client cut backs have resulted in a lower production volume, which in turn impacts on gross margin due to reduced absorption of fixed manufacturing costs.

Despite these difficulties, which will impact on the businesses full fiscal year, Ampacbelieves the situation will improve. In a conference call with investors John Gibson, CEO of Ampac, explained that “several promising projects​” are underway and that these will help improve performance.

Furthermore, the difficulties of the fine chemicals business have been partially offset by the growth of the company’s aerospace business. This accounted for nine per cent of revenues in Q3 2008 but this had grown to 29 per cent in the latest fiscal results.

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