(Adds CEO comments. In U.S. dollars unless noted)
By Scott Anderson
TORONTO, Dec 13 (Reuters) - MDS Inc MDS.TO MDZ.N said on Thursday that the impact on its operations of the shutdown of a nuclear reactor that makes medical isotopes would be less than it had thought after the Canadian government on Wednesday ordered the reactor be restarted immediately.
The company said it now expects its Nordion division to be able to ship the isotopes to customers sooner than the early to mid-January date it provided last week.
Atomic Energy Corp said it expects that it will be producing medical isotopes within seven to eight days.
Nordion, which supplies about 50 percent of the world’s medical isotopes, has been hard hit by the shutdown of the Chalk River nuclear plant in Ontario, which has been off line since November.
MDS said last week that its medical isotopes and radiopharmaceuticals division would see a reduction in its first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of about $8 million to $9 million.
But company President Stephen DeFalco said on Thursday it would now most likely be less than that.
“It will be less than the number that we put out there when we thought it was a longer issue, but the truth is we don’t know until we start getting product and so we’ll focus on that,” he told Reuters.
“It’s an important number to us but it’s not that material. If it’s eight to nine, versus six to seven...we’re a pretty profitable company and that’s a pretty small number. Fine-tuning that is not really helpful.”
Brian Bapty, an analyst at Raymond James Ltd in Vancouver, British Columbia, said the EBITDA hit would be minimal compared with the lasting fallout from the incident if U.S. customers start looking elsewhere for their supplies.
Bapty said there has been calls in recent years to produce the isotopes in the United States and these calls got louder during the Chalk River shutdown.
“The minimal EBITDA hit in 2008 is irrelevant,” he said. “Does this inspire a competitive landscape? Does this inspire a new competitor into the mix?”
MDS said the reactor would be up to full production within about a week and it would “turn supply around quickly”.
The Canadian government pushed through legislation on Wednesday allowing the reactor to be restarted and resume operations for 120 days.
FOURTH-QUARTER PROFIT SAGS
Also on Thursday, the company said its fourth-quarter profit dropped 68 percent, hurt by the falling U.S. dollar.
MDS said it earned $15 million, or 13 cents a share, for the period ended Oct. 31, down from $47 million, or 33 cents a share, for the same period last year.
On an adjusted basis, earnings per share were 9 cents.
Revenue for the quarter was $318 million, up 22 percent from $260 million.
Analysts had expected an average of 16 cents a share on revenue of $333.8 million, according to Reuters Estimates.
Its Nordion division, at the center of the isotopes storm, reported EBITDA of $21 million, which was unchanged from the same quarter a year earlier. ($1=$1.02 Canadian) (Reporting by Scott Anderson; Editing by Peter Galloway)