Results reflect increased demand for a number of active pharmaceutical ingredients (API) and exceeded the expectations of both Cambrex and analysts. Furthermore, lower production costs and favourable product mix helped Cambrex increase gross margins and operating profit.
“These results reflect the positive impact of the timing of orders for certain larger products, as well as continued increases in generic revenues and order patterns, and slightly higher custom development revenues”, said Steven Klosk, president and CEO of Cambrex.
Quarterly operating profit grew year-on-year by 127 per cent to $8.4m (€6.2m). Revenues also increased as a result of a customer resolving their supply chain disruption, higher sales of a recently approved product and an upturn in volumes of generic APIs.
Cambrex also shipped higher volumes of APIs for nicotine replacement therapy (NRT) products following the acquisition of a majority stake in Zenara Pharma which specialises in the sector. Volume gains in NRT APIs are expected to continue in 2011 but prices will fall.
Other expectations include “higher sales of a product that was approved in 2009, an increase in sales of a couple of our larger APIs, and continued moderate sales growth of generic APIs”, said Klosk.
Shares in Cambrex closed the day up 17.8 per cent at $5.95. Earnings per share in the fourth quarter were considerably more than the estimates of analysts polled by Reuters. Cambrex predicts 2011 sales growth of between three and seven per cent.
Full year 2010
Despite positive fourth quarter results full year operating income was down 24 per cent on 2009. Supply chain disruption at a large client’s facility, which has now been resolved, pricing pressures and inefficiencies at its Milan, Italy plant all had a detrimental impact on full year results.
Having worked through these issues Cambrex is positive about 2011. “I am pleased with the direction our top line should take in 2011 and convinced that we are focused on the right strategic opportunities to position the Company for profitable growth", said Klosk.