January 21, 2011 / 7:25 PM / in 7 years

UPDATE 1-Nordion stock rises, company's growth rate to slow

* Nordion faces tougher market, growth may slow, CEO says

* Nordion says it lost share of medical isotope market

* Shares rise as much as 14 percent (Adds comments from CEO and CFO)

By John Tilak

TORONTO, Jan 21 (Reuters) - Shares of Nordion Inc NDN.TO NDZ.N jumped on Friday on stronger than expected results, but the Canadian health science company said growth might not return to levels seen before the shutdown of a nuclear reactor that was its key supplier.

The company's fourth-quarter profits came in above expectations in Nordion's first quarter since Atomic Energy of Canada's Chalk River reactor reopened after a one-year shutdown because of safety issues.

Nordion, which supplies radioactive isotopes to the medical sector, changed its name from MDS Inc last year.

The company took a severe hit on the shutdown, reporting losses for five consecutive quarters, and it signed a 10-year deal with a subsidiary of the Russian nuclear agency, Rosatom State Corp, to keep isotopes on stream.

But top Nordion executives said the Russian deal was designed to supplement isotopes from the Canadian reactor.

"It's fair to say that we won't see quite the same growth rates that we were seeing," Chief Executive Steve West told Reuters in an interview after the results were released.

"The initial quantities that we will get from Russia in 2011 would not fully cover the shortfall from the (Canadian reactor)."

Nordion's revenue rose 4 percent in the year to Oct. 31. For fiscal 2011, analysts on average expect the company to show revenue growth of 25 percent.

Chief Financial Officer Peter Dans said Nordion views the Russian contribution as a back-up for the Chalk River reactor.

Speaking on a conference call with analysts, West said Nordion lost market share as its customers sought new suppliers during the shutdown.

"The landscape has changed quickly, resulting in a surplus supply of medical isotopes and an acceleration to a more competitive environment," he said.

"The net result is we are seeing lower volumes and higher pricing, but with reduced demand."

West said he did not know if Nordion was still the world's biggest supplier of medical isotopes, the position it held before the Chalk River reactor closed.

Late Thursday, the company reported a profit of $18.2 million, or 14 cents a share, for its fourth quarter ended Oct. 31. That compared with a loss of $18.2 million, or 14 cents a share, in the year-earlier quarter. [ID:nN20154930]

Nordion shares were up 9 percent at C$11.00 on the Toronto Stock Exchange on Friday afternoon after rising as much as 14 percent earlier in the day.

The stock was up 9 percent at $11.04 on the New York Stock Exchange. It has risen 26 percent in the last 52 weeks.

Desjardins raised its rating on the company to "hold" from "sell." ($1=$1.00 Canadian) (Reporting by S. John Tilak; editing by Janet Guttsman) (john.tilak@thomsonreuters.com; +1 416 687 7918)

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