July 8, 2010 / 7:14 PM / in 7 years

UPDATE 1-Velan Q1 profit plummets; sees tough year ahead

* Q1 EPS C$0.05 vs C$0.64 last year

* Q1 sales fall abt 24 pct to C$91.7 mln

* Sees lower sales, margins for the year

* Cuts jobs

July 8 (Reuters) - Industrial valve maker Velan Inc VLN.TO reported a 92 percent drop in first-quarter profit and said it laid off “some employees” citing difficult market conditions, and forecast lower sales and margins during the year.

“There has been downward pressure on valve prices and we expect this will continue,” the company said in a statement.

Net Income for the quarter fell to C$1.1 million, or 5 Canadian cents a share from C$14.3 million, or 64 Canadian cents a share, a year ago. Higher material prices and a stronger Canadian dollar dented earnings.

Analysts on an average were expecting earnings of 28 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Backlog for the quarter was down 5 percent to C$478 million.

Sales for the quarter fell about 24 percent to C$91.7 million, while analysts were expecting C$104.7 million.

“We expect that it will take time for the capital-intensive project market to fully recover,” the company added.

Shares of the Montreal, Quebec-based company were trading down 46 Canadian cents at C$14.07 Thursday afternoon on the Toronto Stock Exchange. (Reporting by Arnika Thakur in Bangalore; Editing by Vyas Mohan)

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