Uranium miner Cameco reports second-quarter profit down from year ago
Posted July 30, 2015 6:15 am.
Last Updated July 30, 2015 3:26 pm.
This article is more than 5 years old.
SASKATOON – The head of Cameco Corp. (TSX:CCO) says the uranium market is set to improve as the company reported a 31 per cent drop in quarterly earnings.
Cameco chief executive Tim Gitzel said uranium prices were flat in the first half of the year, but he expects continued low prices will mean a better uranium market in the future.
“In the current low price environment it’s difficult to justify the economics of projects, which is leading to deferrals or even cancellations,” said Gitzel in a conference call with analysts and investors.
“Each of these new challenges to supply means a widening of the gap between supply and demand which we know is coming.”
He said while mines are being deferred, demand is set to improve, with 64 reactors under construction globally and 25 nuclear plants in Japan having applied to restart.
“That tells us it’s still game on for nuclear in Japan, even if the process is taking longer than everyone thought,” said Gitzel.
He said of those Japanese reactors, five have made it through regulatory safety reviews and two are expected to start later this year.
Cameco reported its earnings dropped to $88 million in the latest quarter, down from $127 million a year ago.
The uranium miner says profit amounted to 22 cents per share in the quarter ended June 30, compared with a profit of 32 cents per share a year ago.
Revenue improved to $565 million, up from $502 million.
On an adjusted basis, the company said it earned $46 million or 12 cents per share, down from $79 million or 20 cents per share a year ago.
Cameco said the drop was due to higher administrative costs and a $28-million boost last year from a favourable settlement related to a dispute regarding a long-term supply contract with a utility.
Those changes were partially offset by higher gross profit from its uranium and fuel services segments and settlement costs last year related to the early redemption of some of its debentures.
During the quarter, Cameco suspended uranium shipments from its northern Saskatchewan operations as wildfires made road conditions dangerous, but Gitzel said those shipments have resumed and operations were not affected by the fires.
Until markets improve, Gitzel said the company is concentrating on keeping costs down and running safe operations.
