MONTREAL – Industrial value maker Velan Inc. has a record level of backlog orders to be shipped in the next year, indicating improving global markets for its products, the company’s CEO said Wednesday.
Chief executive Tom Velan said his company is starting its fourth quarter with a strong backlog, contrary to the “insufficient” orders that it faced last year.
“The increases in bookings, backlog and sales for the year to date are good indications of improving global markets for our products,” Velan told a conference call after the company reported its quarterly profit dropped two-thirds to US$4 million.
“We have a record level of order backlog scheduled to be shipped within 12 months and we’re focusing our efforts to maximize our sales over the next 12 months,” he added.
Velan’s order backlog is $653.6 million, he said. However, Velan said bookings in the quarter of $93.3 million were down 41.1 per cent year over year due to the fall in the value of the euro compared with the U.S. dollar, adding that about 58 per cent of the backlog is in Euros.
He said the company will work to get out its order backlog efficiently to increases sales and earnings.
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Italian engineered valve maker ABV Energy, a Velan acquisition, had a solid quarter and expects results to further improve due to increased sales and new plant capacity the goes into operation in the fourth quarter.
Despite lower net earnings, Velan said revenues jumped nearly 13 per cent in its third quarter. The company, which reports in U.S. dollars, said sales rose to US$118.9 million from $105.7 million.
The company said its net earnings dropped to US$4 million or 18 cents a share for the three months ended Nov. 30. That was down from $11.9 million or 54 cents a year earlier.
However, Velan’s bottom line was affected by the impacts of last year’s acquisition of ABV Energy S.p.A., currency effects and other items linked to the deal.
The company also booked $1.4 million in legal costs in the latest quarter as its U.S. subsidiaries defend pending industry-wide asbestos-related lawsuits. That was up from $1.2 million in legal costs a year earlier.
Excluding the results of Velan ABV, the effects of purchase price accounting and currency impacts, Velan would have generated net profits of $6.4 million, compared with $6.8 million the previous year.
“Faced with significant material cost increases over the last year, we have been selectively raising our selling prices,” Velan said.
On the asbestos lawsuits, Velan said they are related to products sold years ago.
“We strongly believe that our products, which were supplied with encapsulated packing and gaskets in accordance with valve industry practice and customer mandated specifications, did not contribute to any asbestos-related sicknesses,” he said.
Velan is a leading maker of industrial valves with sales of $381 million in its last reported fiscal year. The company employs more than 1,800 people and has manufacturing plants in 10 countries serving the oil and gas, nuclear, petrochemical, pharmaceutical and pulp and paper industries among others.
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