BUSINESS

Neptune Technologies says Q3 loss soars to $12.4 million on explosion writedown

01/15/2013 03:25 EST | Updated 03/17/2013 05:12 EDT
MONTREAL - Neptune Technologies & Bioressources Inc. says a large asset writedown linked to a fatal explosion at its Quebec production facility in November pushed the company's net loss to $12.4 million in the third quarter.

The Montreal-area diet supplement maker also said its insurer had confirmed the impending first payment of $6 million resulting from the accident that killed three and injured 18.

Neptune reported Monday that it lost 21 cents per share for the period ended Nov. 30. That compared to a loss of one cent per share or $1.43 million a year ago.

Revenues increased 37 per cent to $7 million in the third quarter from $5.12 million a year ago.

The core nutraceutical (medical nutrition) segment lost $10.9 million on $6.6 million of revenues, compared to a profit of $869,000 on $5.1 million of revenues in the prior year.

Neptune (TSX:NTB) said the loss resulted mainly from an $8.46 million impairment charge related to the explosion. It also derecognized $1 million in deferred taxes and $1.2 million in long-term investment tax credits as required under accounting principles until it resumes operations and generates taxable income.

"Due to the circumstances, those writeoffs were imperative and negatively affected our bottom line. From now on, amounts received from the insurance will offset the impairment losses," stated chief financial officer Andre Godin.

He said Neptune's insurance will cover property damage to its Sherbrooke facility, business interruption and general liability up to an unspecified amount and subject to deductibles and exclusions.

"We welcome the first interim payment from our insurer, given the importance of our insurance recovery in pursuing our action plan to resume production."

The company, which will hold a conference call with analysts Thursday, said it is pursuing the balance of its unspecified insurance claim that will likely allow it to fund most of the reconstruction costs. The remaining costs are expected to be funded through a refinancing of its existing credit facility put in place to fund the expansion.

Neptune expects the new plant that will have a capacity to produce about 150,000 kilograms of krill oil per year and may be operational within six to nine months from the announcement of its reconstruction plan.

Following the explosion, it laid off more than 70 employees in Sherbrooke and at its Laval head office. About 30 plant employees continue to work on the plant's reconstruction.

Senior management and employees have taken salary cuts of at least 20 per cent during the plan's implementation, but the company said it granted stock compensation as a way to partially offset the wage reductions and to retain key employees.

Neptune is a biotechnology company that primarily develops and commercializes marine-derived omega-3 polyunsaturated fatty acids. It has a patented process of extracting oils from Antarctic krill, which is then sold as a dietary supplement capsule, primarily to distributors in the U.S., Europe and Asia.

On the Toronto Stock Exchange, Neptune's shares were up 23 cents, or 9.75 per cent, at $2.59 in Tuesday afternoon trading. Over the last 52 weeks, its shares have traded at between $1.59 and $5.05.