Cameco first-quarter profits slip 36 per cent on lower prices, higher costs

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The Canadian Press, On Friday May 6, 2011, 8:55 am
By The Canadian Press

SASKATOON - Uranium miner Cameco (TSX:CCO) says first-quarter profits slipped 36 per cent due to a decline in realized electricity prices and higher costs.

The company's profits missed analyst expectations, falling to $91 million from $143 million, which is equivalent to 23 cents per share, compared to 36 cents per share during the same quarter last year.

Cameco said lower prices affected its electricity and fuel services businesses, and lower sales in its uranium business and an increase in the average cost of products sold.

Adjusted earnings per share were 21 cents below average analyst estimates for a profit of 31 cents per share, according to Thomson Reuters.

Revenues declined six per cent to $454 million, well below expectations of $540 million.

Cameco plans to expand mines in the next few years, and expects it won't need significant additional funding.

The company said there could be short-term delays in the nuclear industry as it slows down to learn from the Fukushima nuclear reactor crisis created by March's 9.0 magnitude earthquake in Japan.

But it said some countries have already reaffirmed nuclear building programs, which drive up demand for global uranium supply.

"That's why our strategy to double annual uranium production by 2018 from our world-leading asset base is unshaken," CEO Jerry Grandey said in a statement.

The company has been looking to expand its relationship with China in recent quarters, signing two supply contracts last year with Chinese utilities and saying it would like to grow its partnership further with the Asian market.

Earlier this year, Cameco signed a deal to buy uranium produced at the Sotkamo nickel-zinc mine in eastern Finland.

Cameco is one of the world's largest uranium producers with mines, mills, conversion plants and exploration projects in Saskatchewan, Ontario, the United States and Australia.

It is also a key partner in the Bruce Power nuclear power plant in southwestern Ontario.

The Saskatoon-based company and other major global uranium producers are cashing in on soaring uranium demand from China and other parts of Asia as those countries embark on a big nuclear power plant building boom to meet future electricity demands from their soaring economies.

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