November 12, 2009 / 11:00 PM / 10 years ago

UPDATE 2-Neo Material Q3 profit tops Street

* Q3 EPS $0.08 vs $0.07 yr ago

* Rev falls 24 pct

(Adds CEO comment, analysts’ comments)

By Koustav Samanta

BANGALORE, Nov 12 (Reuters) - Neo Material Technologies Inc NEM.TO, a maker of magnetic material and magnets, posted a 16 percent rise in quarterly profit that beat market estimates, helped by lower expenses.

Canaccord Adams analyst Yuri Lynk, who currently has a “buy” rating on the stock, said the company’s earnings will grow in 2010, with acquisitions being a part of its growth plan.

“With no long term debt and a strong cash position, we are well positioned to take advantage of opportunities that augment our diversification strategy,” Chief Executive Constantine Karayannopoulos said in a statement.

In the near term, the company would continue to benefit from the recovery in consumer electronics’ demand, but the fourth quarter is going to be weaker than the third quarter owing to seasonality factors, Clarus Securities analyst Youssef Abboud said by phone.

For the third quarter, the Toronto-based company reported a net income of $9.1 million, or 8 cents a share, compared with $7.8 million, or 7 cents a share, a year earlier.

The company, which produces rare earth metals such as neodymium, praseodymium, dysprosium and terbium and rare earth magnetic powders, said revenue fell 24 percent to $54.1 million.

Analysts on average were expecting earnings of 6 cents a share, before special items, on revenue of $51.8 million, according to Thomson Reuters I/B/E/S.

The company said its cost of sales, excluding depreciation and amortization, fell 39 percent to $30.3 million.

Operating income for the quarter was $11.2 million, compared to $10.9 million, a year ago. The company reported a foreign exchange gain of $611,000 during the period.

Shares of the company closed at C$4.10 Thursday on the Toronto Stock Exchange. (Reporting by Koustav Samanta in Bangalore; Editing by Maju Samuel)

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