OTTAWA — Lingering effects from the shutdown of the Chalk River nuclear reactor in 2009 are expected to have a negative effect on Nordion Inc. (TSX:NDN) sales and earnings for some time to come, chief executive Steve West said.
“Growth in this segment will be primarily based on rebuilding our market position to regain share,” West told financial analysts Friday, referring to the shutdown that abruptly cut off Nordion’s chief supply of material used in medical isotopes for more than a year.
“We intend to focus our efforts on rebuilding our market position to maximize the value of this core business.”
West said that during the outage the company’s customers looked to other suppliers for their medical isotopes.
“As time goes on those contracts will come up for renewal, so our market share can grow with what was our previously established customer base and our sales team is being aggressive in working with new customers,” he said.
The company had suffered a string of quarterly losses due to the shutdown of the government-owned NRU reactor at Chalk River, Ont.. The NRU reactor, which had been one of the world’s few sources of medical isotopes, restarted operations in August.
To limit future disruptions, Nordion has signed a deal with Russia’s state-owned RosAtom State Corp. to provide it with a supplemental supply of Molybdenum-99.
“At current prices, the cost of Moly-99 from RosAtom is higher than the cost from AECL, so we expect our segment earnings to decrease,” West said.
“However we believe the strategic value of securing this new Moly-99 supply to the market was the right business decision. (But) For sustainable long-term medical isotope supply, the Maple project continues to be our preferred solution.”
The Maple reactors, which were to replace the aging NRU reactor, were millions of dollars over budget and years behind schedule when the Tories pulled the plug due to what the government said were design flaws.
Nordion, which keeps its books in U.S. dollars, reported Thursday a profit of US$15.7 million, or 14 cents per share, in the fourth quarter ended Oct. 31 compared with a loss of $58.6 million, or 14 cents per share, a year earlier, when the company had more shares outstanding.
Revenue from continuing operations for the quarter totalled $85.8 million, up from $51.4 million a year ago.
The company also said it would start paying a quarterly dividend of 10 cents per share to shareholders of record as of March 17. The money will be paid April 1. The stock will have an annual yield of about 3.7 per cent based on its share price Friday.
Shares in the company closed up 95 cents, or 9.4 per cent, at $11.06 Friday on the Toronto Stock Exchange.
RBC Capital Markets analyst Douglas Miehm called it an impressive quarter for the company, which changed from the former MDS and shifted focus from its former business as a medical imaging specialist.
“Based on our preliminary assessment of the fourth-quarter results, Nordion appears to have posted strong results across all line items,” Miehm wrote in a note to clients.
Earlier this month, the company extended a contract with one of its primary customers to supply Molybdenum-99. The contract with Lantheus Medical Imaging Inc., originally set to expire July 31, 2011, will now run until Dec. 31, 2013.