Cameco takes $168M write down on Kintrye project, Q4 profits down 83 per cent

SASKATOON – Cameco Corp. (TSX:CCO) is reporting an 83 per cent drop in net earnings in its fourth quarter, largely due to a $168 million write-down on its Kintyre project in Australia and lower profits from its uranium business.

The Saskatoon-based company reported revenues of $958 million for the period ended Dec. 31, down just one per cent from $971 million in the year earlier period.

Still, the write-down and downward pressure on uranium prices saw net earnings for the quarter come in at $45 million, or 11 cents per diluted share, a steep drop from $265 million, or 67 cents per diluted share, in the year earlier period.

The uranium producer, however, delivered a solid beat on analysts expectations on both revenue and adjusted earnings.

According to a Thomson Reuters poll, analysts were expecting revenue of $820.8 million for the quarter and adjusted earnings per share of 41 cents.

Cameco handed in an adjusted EPS of 60 cents.

“2012 was a busy and challenging year; but we again delivered solid results,” president and CEO Tim Gitzel said in a release.

“Our focus in 2013 will be on execution and reducing costs without compromising on our values.”

For the full year, Cameco posted $2.32 billion in revenues, slightly lower than $2.38 billion in 2011. Net and adjusted earnings were $266 million and $447 million, respectively, sharply down from $450 million and $509 million year-over-year.

The $168 million write-down of the carrying value of its interest in Kintyre was due to several factors, the company said.

“Due to the weakening of the uranium market since the asset was purchased in 2008, no increase in mineral resources in 2012 and the decision not to proceed with the feasibility study, we concluded it was appropriate to recognize an impairment charge for this asset,” it said.

“Kintyre remains an important asset in our portfolio.”

Cameco said the uranium market saw little improvement in 2012 over the year earlier, when demand for uranium fell off following the nuclear disaster in Japan, but added the long-term outlook remains positive.

“Nuclear remains an important part of the global energy mix and it is clear that new uranium supply will be needed.”

The company, which is one of the world’s largest uranium producers with mines, mills and conversion plants in Canada, the United States and abroad, says it will look at international markets like China and Japan for demand.

But it pointed out that there is “uncertainty” in the markets as new mine projects are being delayed or cancelled.

“Cameco remains committed to nuclear energy,” said Gitzel. “We see a great opportunity to grow our business and build value for shareholders and are working to realize it.”

In December, Cameco announced that it had completed a US$430-million deal to buy one of Australia’s largest undeveloped uranium deposits from BHP Billiton Ltd. (NYSE:BHP).

Shares in Cameco, which reported after markets closed Friday, ended the day up five cents to $21.71 on the Toronto Stock Exchange.