6 Oct

Uranium miner Cameco reports 85 per cent drop in second quarter profit

Uranium miner Cameco reports 85 per cent drop in second quarter profit SASKATOON – Uranium miner Cameco (TSX:CCO) booked an 85 per cent drop in second-quarter earnings on lower sales, lower prices and higher costs, but said it expects demand and uranium prices to pick up before the end of the year.The world’s largest publicly traded uranium miner said Friday that second-quarter deliveries were low, in line with its expectations that it would be the quarter of 2012 with the weakest demand.On top of that, the contracts it delivered on during the quarter came with average realized uranium prices that were 10 per cent below where they were during the quarter a year ago.Demand for uranium fell off after last year’s nuclear disaster in Japan, and contracts for the quarter were negotiated when prices were still low, said president and CEO Tim Gitzel on a conference call.“As we move out of lower price contracts that came into effect when uranium prices were lower and into higher price contracts, we expect to see a general trend upwards,” he said, adding that deliveries are heavily weighted to the fourth quarter.While the industry continues to be in “wait and see” mode, Cameco said several positive developments have emerged. Japan gave approval to restart two reactors after being confirmed safe.Since the previous quarter, the nuclear industry continues to experience near- to medium-term uncertainty. However, positive developments have emerged as well.“We also believe these initial restarts will help pave the way for additional restarts in the near future,” the company said.“Overall, the uranium market continues to be in a wait-and-see mode as utilities are generally well covered for the next few years, and suppliers are similarly heavily committed. However, we have seen the emergence of some long-term contracting over the past few months.”Net earnings for the quarter came in at $8 million, or two cents per share compared to $55 million, or 14 cents per share in the same period last year. This quarter’s earnings included a US$30-million expense related to a contract termination.Revenue was $391 million for the quarter, down from $426 million year over year.On an adjusted basis, Cameco’s earnings were $34 million, or nine cents per share for the quarter compared to $71 million, or 18 cents year over year — missing analyst expectations by 15 cents.Analysts polled by Thomson Reuters were on average expecting Cameco to earn 24 cents per share and post revenues of $515 million.The company cited lower earnings from its uranium business based on lower sales volumes, lower realized prices and higher costs.However, it reported positive results in its electricity business, which benefited from a 16 per cent increase in power generation at its partially owned Bruce Power.Despite the weakness, Cameco maintained its revenue and production guidance for the year.Shares in Cameco were down 93 cents, or four per cent, to $21.71 in early trading on the Toronto Stock Exchange.In June, Calypso Uranium Corp. (TSXV:CLP) said Cameco bowed out of their exploration agreement for several properties in Argentina as the result of a strategic shift in focus.Cameco could have acquired a 51 per cent interest in Calypso’s subsidiary Energia Mineral Inc. under a three-year option agreement signed in September 2010.Under the 2010 agreement, Cameco had the option to spend $3 million in each of three years to acquire the 51 per cent equity stake in Energia. By pulling out of the final year of funding, it will have no equity stake in Energia.Saskatoon-based Cameco is one of the world’s largest uranium producers. It has mines, mills and conversion plants in Canada, the United States and abroad and produces fuel that runs nuclear power plants around the world.Shares in the company closed down 2.5 per cent or 56 cents to $22.08 on the Toronto Stock Exchange. by News Staff Posted Jul 27, 2012 5:17 pm MDT AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email

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