SASKATOON - Cameco Corp. (TSX:CCO) is reducing its 2008 uranium production target by one million pounds, due to delays in expanding some of its mines, the company announced Thursday in addition to quarterly results that included a big drop in profit and sales.
The company's second-quarter earnings were affected by declines in its uranium sales volumes, fuel services revenue and output from the Bruce Power nuclear generating plant in southwestern Ontario.
Those negative factors were partially offset by higher prices for uranium, the world's biggest uranium company said Thursday.
Cameco reported that its net income fell to $150 million or 44 cents per share, down from $205 million or 58 cents per share in the second quarter of 2007. Revenue fell to $620 million in the second quarter, down from $725 million a year earlier.
Despite the profit drop, the company managed to meet analysts estimates for earnings.
"Since Cameco's quarterly results vary significantly, comparing today's results to our record second quarter last year is not a good indicator of future performance," Jerry Grandey, Cameco's president and CEO, said in a statement
"We will continue to benefit from our uranium contracting strategy, which will provide upside benefit from rising market prices and protection should prices fall."
The company's statement had little new to add about its troubled Cigar Lake mine development, which has been struggling to cope with flooding problems.
"We have completed the initial data collection and now plan to allow the water in the shaft to return to natural equilibrium over the next couple of weeks. We will continue gathering and assessing the information we require to determine the next steps in our remediation plan."
However, Cameco said its share of uranium production for 2008 is now projected to total about'.6 million pounds of U3O8, down from the previous forecast of 20.6 million pounds of the fuel used to power nuclear generating plants.
"The decline in forecast production is due to a reduction in our expected U.S. ISR production as a result of delays in our ability to put new infrastructure in place such as additional wellfields, as well as a decrease in anticipated Inkai production due to the shortage of sulphuric acid in Kazakhstan."
In Thursday trading on the Toronto Stock Exchange, Cameco shares rose 38 cents to $33.27. They're still down for the week, after Cameco announced further delays to deal with flooding at its big new Cigar Lake mine.
Besides its uranium businesses, Cameco is the controlling shareholder of Centerra Gold Corp. (TSX:CG). Cameco's overall results included $143 million in revenue from Centerra, up from $117 million a year earlier.
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