Patheon feels effects of recovery plan in Q2

By Phil Taylor

- Last updated on GMT

Related tags: United states, North america, Patheon

Canada's Patheon trimmed its losses in the second quarter in
another sign that the turnaround programme at the company taking
effect.

Net loss came in at $8.5m, well shy of the $22m reported this time last year, helped by a 16 per cent hikes in revenues to $186m and production volumes up 8 per cent. These are "solid results​," according to chief executive Wes Wheeler, who said the figures "demonstrate the early progress we are making in reshaping Patheon.​" Patheon's financial performance in the last few years has been held back by its Puerto Rican operations, acquired as part of the purchase of Mova Pharmaceuticals in 2004, and this quarter was no different. At the end of last year the company put in place a recovery strategy, indicating that it would sell one of its Puerto Rican facilities (in Carolina) whilst driving improvements at two others (Manati and Caguas) to make them profitable in 2008. The company reported a $2m loss on the Carolina facility this quarter but said it had made "good progress​" on plans to focus operations in Manati and Caguas. "[We] have already begun to see the benefits from the operational and service improvements​," it said. Patheon also recently divested its Niagara-Burlington over-the-counter medicines business to Pharmetics, classified as discontinued operations in the latest results statement, and completed the sale of a facility in York Mills, Ontario, in April. It has also been downsizing a unit in Swindon, UK. Looking at the performance of its individual divisions, Patheon said commercial manufacturing revenue increased 15 per cent from a year earlier to $151m. The star performers were units in Bourgoin-Jalleu in France, helping to drive "strong​" growth in Europe, and the company's Whitby facility in Canada which helped the firm to "steady​" growth in North America. Overall, European revenues rose 26 per cent to $88m, with a $9m benefit from favourable exchange rates, while North America advanced 9 per cent to $98m. Meanwhile, Patheon's pharmaceutical development services unit - covering activities such as formulation and analytical method development and clinical trial materials (CTM) manufacturing - pulled in a good quarter. Revenue grew 23 per cent to $35m, with more than 50 new contracts signed albeit mainly with existing customers. "Revenues increased in all our businesses and for both North America and Europe as a result of our renewed commitment to customer service​," commented Wheeler. "We also made meaningful progress with the underlying profitability of the operations; however there is still room for improvement and it continues to be one of our key areas of focus​." Looking ahead to the remainder of the year, Patheon said it expects revenues in the second half to be "slightly higher​" than in the first half of the year.

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