The Advance NanoTek Ltd (ASX: ANO) share price has started the week with a day in the red.
In morning trade, the advanced materials company's shares were down as much 9% to $3.61.
The Advance NanoTek share price has since rebounded but is still down 2% to $3.90 in late afternoon trade.
Why is the Advance NanoTek share price sinking lower?
Investors have been selling Advance NanoTek shares on Monday following the release of an update on its first half performance.
According to the release, as the company had previously warned, it is expecting to post the smallest of profits for the six months ended 31 December.
Subject to its audit, Advance NanoTek recorded a half year result profit before tax of $90,000. This compares to a net profit before tax of $4.81 million in the prior corresponding period.
Management advised that this weak result has been driven by travel restrictions and lockdowns caused by COVID-19. This has led to a reduction in sunscreen sales globally and therefore lower demand for the company's zinc oxide which goes inside these products.
What about current trading?
Within the release, the company listed a number of "good news" items. One of those is that it has witnessed an improvement in its performance during January.
It advised that it has experienced a significant increase in sales orders, leading to the company recording an unaudited profit before tax of $540,000 for the month.
In addition to this, the company revealed that it has been working on a number of new products which it hopes to release in the near future. It expects these to have a positive impact on its FY 2022 results.
It explained: "ANO has successfully developed 15 new bulk intermediate products, vegan and/or organic based, including an all natural insect repellent. Once our TGA licence is obtained, ANO will begin full scale production of the products."
"Samples are being prepared for our distributors and ANO anticipates sales of these products to impact our results in FY22. In addition, we are working on a premium range of dispersions based on our current dispersions and we expect these to be available to distributors and customers in FY22," it added.
Looking ahead, management appears to believe the future will be bright once the pandemic passes.
It concluded: "The Board would like to point out that most of the achievements listed under the Good News heading are likely to produce positive results for many years to come, on the other hand, the Bad News, COVID-19 issues are likely to be resolved over the next two years."
