Nutritional Growth Solutions Reports 34% Revenue Drop, 41% Loss Improvement

Revenue Decline and Cost Discipline

Nutritional Growth Solutions Limited (ASX: NGS) has released its Appendix 4E for the year ended 31 December 2025, revealing a challenging year marked by a significant drop in revenue but a notable improvement in its net loss. The company’s revenue fell 34% to US$1.63 million, driven by lower sales volumes across key channels in both the United States and international markets. This decline followed a deliberate strategy to reduce marketing expenditure and focus on tighter cost control.

Despite the revenue setback, the company managed to reduce its net loss after tax by 41%, from US$2.9 million in 2024 to US$1.71 million in 2025. This improvement was primarily due to a sharp reduction in selling and marketing expenses, which fell from US$1.84 million to US$440,000, reflecting headcount cuts and a more targeted advertising approach.

Margin Pressure and Operational Challenges

Gross profit dropped to US$255,000 with the gross margin halving to 15% from 33% the previous year. The margin compression was attributed to lower operating leverage, increased freight and fulfilment costs, and inventory write-downs recognised during the year. These factors highlight the operational pressures the company faced amid a subdued sales environment.

General and administrative expenses also decreased modestly to US$1.44 million, underscoring ongoing efforts to maintain cost discipline. Non-cash finance expenses of US$238,000, related to interest accretion and equity-settled financing arrangements, also impacted the bottom line but did not affect cash flow.

Strengthened Cash Position and Capital Raising

On the cash flow front, Nutritional Growth Solutions improved its net cash used in operating activities to US$1.21 million, down from US$1.93 million the prior year. This was supported by reduced operating expenditure and lower inventory levels. The company bolstered its liquidity by raising approximately US$1.7 million through equity placements and convertible loan issuances, ending the year with a cash balance of US$517,000, up from just US$31,000 at the end of 2024.

No dividends were declared or paid during the period, and the board has not proposed any dividend payments, reflecting the company’s focus on preserving cash amid ongoing restructuring and market challenges.

Looking Ahead

While the company’s financial statements are still subject to audit, the results indicate a cautious but pragmatic approach to navigating a tough market environment. The significant cost reductions and capital injections provide a buffer, but the decline in revenue and margin pressures raise questions about the sustainability of the current business model and growth prospects.