December 18, 2009 / 12:45 PM / 9 years ago

UPDATE 2-Patheon results top estimates, shares drop

* Revenue rose 2.3 percent to $176.1 mln

* Shares drop 1.2 percent in Toronto (Adds analyst comments. Figures in U.S. dollars)

By Scott Anderson

TORONTO, Dec 18 (Reuters) - Patheon Inc PTI.TO reported a quarterly profit on Friday that topped analyst estimates as the Canadian drugmaker emerged from a year-long takeover battle.

But shares of company dropped more than 1 percent on concern that its growth would be muted for the next few quarters as key customers cut costs and scale back orders.

The contract drug manufacturer said it earned $4.6 million, or 4.5 cents a share, in the fourth quarter ended Oct. 31, compared with $35.8 million, or 44 cents a share, a year earlier.

The 2008 results included a one-time gain of 39 cents a share as Patheon shed debt.

Revenue rose 2.3 percent to $176.1 million as a strong performance from its European divisions offset a weak showing by its North American units.

The results also included $8 million in expenses related to a takeover battle between Switzerland’s Lonza Group LONN.VX and Patheon’s biggest shareholder JLL Partners.

Analysts, on average, had expected earnings per share of 2 cents and revenue of $174.8 million, according to Thomson Reuters I/B/E/S.

Late last month, Patheon settled a lengthy legal battle with JLL Partners, putting an end to almost a year of uncertainty for the drugmaker.

The settlement included the appointment of a new board and negated the need for a special shareholders meeting scheduled for mid-December, which had called for a new slate of directors.

Lonza withdrew its $460 million offer to acquire Patheon in October, citing the cost and opposition from JLL, which owns 57 percent of the drugmaker.

Shares of Patheon, which have doubled in the past year since the takeover bid was announced, were down 1.2 percent at C$2.39 on the Toronto Stock Exchange on Friday morning.

Maher Yaghi, an analyst at Desjardins Securities in Montreal, expects the shares to linger around that level for the next few quarters as Patheon customers continue to cut spending.

“Revenue growth will continue to be muted for several quarters ... as small biotech and pharma companies remain conservative in their spending patterns,” he said.

“The shares will remain range-bound until these factors improve and until indications of sustainable long-term growth become more visible,” Yaghi said.

The company also said it expects to record a $7 million charge in its first quarter as it closes a Puerto Rican plant and consolidates operations.

$1=$1.07 Canadian Reporting by Scott Anderson; editing by Rob Wilson

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