Loss for CMO Patheon smaller than expected
It was a classic good news/bad news day for contract manufacturer Patheon ($PTI).
While still impressive, the loss Patheon reported for its fiscal second quarter that ended April 30 was smaller and revenue was "robust," Reuters reports. It also forecast higher revenue for the second half. A nearly $60 million charge for winding down some of its manufacturing operations at a U.K. plant added to the loss for Patheon but analysts today suggest that the financial corner has been turned for the CMO.
The company on Wednesday reported a $79.7 million second-quarter loss, up from $10.4 million a year earlier. Part of that is attributable to the $57.9 million charge it took for adjustments it is making at its Swindon, U.K., plant. The company last month reported that since it was unable to sell the facility, it will stop taking on new non-cephalosporin commercial production there, finish up as much as it can and transfer the rest to other facilities over the next two to three years. The company also plans to move to other facilities most of its product development work at Swindon that requires commercialization. The moves are part of a strategic restructuring to cut costs and could result in the loss of about 90 jobs.
Patheon reported revenue of $181.5 million, a 6.8% increase compared with a year earlier. It also reported that commercial manufacturing (CMO) revenue for the second quarter increased $8.5 million, or 6.1%, to $147 million, from $138.5 million a year earlier. When it removes a $17.4 million benefit from a contract cancelation recorded last year, CMO revenue increased 21.4% to $25.9 million. It forecast 2012 revenue of more than $725 million, compared with $700 million in 2011.
In a research report passed on by the company, Lennox Gibbs of TD Securities says he is cautiously optimistic about the company, adding, "We continue to believe that Patheon is amongst the best positioned to capitalize on the third-party dosage form manufacturing trend." RBC analyst Douglas Miehm said in a report that "H2 turnaround is ahead of schedule."
The company's shares were up as much as 12% Wednesday on the Toronto Stock Exchange. Much of its operations are in Canada.