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Cameco Q1 Profit Rises - Update

CamecoCorporation CCJ 050410

Canada-based nuclear energy company Cameco Corp. (CCJ,CCO.TO) on Tuesday reported a 73% increase in profit for the first quarter, buoyed by a one-time gain in addition to higher profits at the company's fuel services and electricity businesses.

However, profit at the company's uranium business declined due to lower sales volumes and lower Canadian dollar realized prices. The company's adjusted earnings per share for the quarter increased 4% from the year-ago period.

Cameco's net earnings for the first quarter increased to C$142 million or C$0.36 per share from C$82 million or C$0.22 per share in the same period last year.

The results for the latest quarter include an after-tax gain of $31 million for unrealized mark-to-market gains on financial instruments, while the year-ago quarter's results include unrealized losses on financial instruments of $24 million.

On an adjusted basis, net earnings for the latest quarter edged up to C$111 million or C$0.28 per share from C$103 million or C$0.27 per share in the year-ago quarter.

The increase in adjusted earnings for the quarter reflects higher profits at the company's fuel services business due to higher sales volumes and higher production, in addition to higher profits from the company's electricity business, relating to higher realized selling prices.

These were partially offset by lower profits in the company's uranium business due to lower sales volumes and slightly lower Canadian dollar realized prices, which were impacted by a stronger Canadian dollar.

Revenue for the first quarter was C$485 million, down 2% from C$493 million in the corresponding period a year ago due to lower sales volumes and slightly lower Canadian dollar realized prices in the company's uranium segment.

The company's gross profit for the quarter increased 12% from last year to C$180 million.

Cameco's revenue for the first quarter from the uranium business declined 9% to C$305 million from C$336 million in the year-ago period, reflecting a 7% decrease in sales volumes and a 2% decrease in the realized selling price in Canadian dollars.

Sales volumes for the quarter were 6.6 million pounds, down from 7.1 million pounds in the year-ago period, while average realized price declined to C$45.79 per pound from C$46.72 per pound a year ago. Gross profit for the uranium business dropped 12% from last year to C$102 million.

In the electricity business, revenue for the quarter increased 11% to C$394 million from $355 million in the same period last year, reflecting higher realized prices that reflect spot sales and revenue recognized by Bruce Power Limited Partnership, or BPLP, under its agreement with the Ontario Power Authority.

Cameco owns 31.6% of BPLP. BPLP generated 6.8 terawatt hours or TWh of electricity in the quarter, at a capacity factor of 98%. Cameco recorded a 23% increase in its share of earnings before taxes for the quarter to C$54 million.

Cameco's fuel services revenue for the first quarter increased 11% to C$60 million from C$54 million in the same period last year due to a 16% increase in reported sales volumes. The segment reported a 1% decline in the average realized price for fuel services products. Sales volume for the quarter were 2.2 million kilograms of uranium, or KgU, up from 1.9 million KgU in the previous-year quarter.

Gross profit for the segment more than tripled to C$22 million from C$7 million a year ago, aided by a 17% decline in cost of products and services sold and lower unit cost of sales.

The company's board of directors approved a quarterly dividend of C$0.07 per share on the outstanding common shares of the company that is payable on July 15, 2010, to shareholders of record at the close of business on June 30, 2010.

In early December, Cameco and gold producer Centerra Gold Inc. (CG.TO) Tuesday said a syndicate of underwriters agreed to purchase about 88.62 million common shares of Centerra, held by Cameco, on a bought deal basis at C$10.25 per share for sale to the public. The syndicate is being led by CIBC World Markets Inc. and RBC Capital Markets. Cameco expects to receive net proceeds of about C$872 million from the offering, prior to payment of expenses, which is expected to further strengthen the company's capital position. Centerra will not receive any proceeds from the offering.

Looking ahead to fiscal year 2010, Cameco said its outlook is unchanged from the outlook includes in its annual statements for fiscal year 2009.

The company continues to maintain its outlook for full-year consolidated revenue to decrease 5%-10% compared to 2009.

Cameco forecasts uranium production for the year of 21.5 million pounds, uranium sales volume in a range of 31 million pounds-33 million pounds and revenue for the segment to decrease 5%-10% from the prior year. The company plans to double annual uranium production to 40 million pounds by 2018.

For the fuel segment, the company projects sales volume for the year to increase 15%-20% and revenue to increase 5%-10% from the previous year. Electricity segment revenues are forecast to decrease 5%-10% from a year ago.

In Tuesday's regular trading on the NYSE, CCJ is trading at US$24.27, down US$0.34 or 1.38% on a volume of 0.71 million shares. In the past 52 weeks, the stock has been trading in a range of US$22.61-US$33.74.

On the Toronto Stock Exchange, CCO.TO is trading at C$24.77, down $0.01 or 0.04% on a volume of 0.35 million shares. In the 52-week period, the stock has been trading in a range of C$24.36-C$35.00.

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