Kendle posts operating loss on early stage costs & charges
Declining early stage revenues prompted a strategic review to consider all options for the future of the unit. Following the review Kendle closed its Phase I site in Utrecht, the Netherlands, at a cost of $3.2m (€2.3m), and was hit by an early stage-related goodwill impairment charge.
Both charges contributed to an $11.7m fourth quarter operating loss but the restructuring is deemed necessary for the long-term prospects of the business. Candace Kendle, in her final results as CEO, said cost structure realignment positioned the company for long-term growth.
As of May 1 the task of realising long-term growth passes to Stephen Cutler, the incoming CEO. Achieving growth will require Cutler to improve the fortunes of the early stage unit and overturn a double-digit year-on-year decline in late stage fourth quarter revenues.
Operating income from the late stage unit in the fourth quarter, as for the full year, declined on lower revenues. It was early stage though, and specifically its costs and charges, underpinning the organisation-wide loss.
Revenues from early stage fell to $6.3m in the fourth quarter and these earnings were wiped out by the costs and charges incurred following the closure of the Utrecht facility.
Despite difficulties in Utrecht the proportion of revenues coming from Europe increased slightly. Latin America also made gains at the expense of Asia-Pacific and North America. This was broadly inline with full year performance.
Reasons for optimism include year-on-year growth in fourth quarter new business awards and a sequential upturn in gross book-to-bill. However, despite the uptick in fourth quarter awards, total business authorisations at the end of 2010 were at the same level as 12 months previously.