Environmental costs cut Asarco’s profit

Fourth-quarter net earnings of US$3.7 million (10cents per share) were reported by Asarco (NYSE), a 94% drop from $59.1 million ($1.42 per share) reported in the same period of 1989. Sales of products and services totalled $549.9 million in the fourth quarter of 1990, compared with $531 million a year ago.

The lower quarterly profit reflects a nonrecurring after-tax charge of $51.5 million ($1.24 per share) for environmental and royalty costs. The provision, which totalled $82.5 million pretax, included $75.5 million in reserves to cover environmental costs associated with the company’s current and previously closed operations. Included, as well, were $7 million for the retroactive cost of increased state of Arizona royalties.

Lower lead, silver and zinc prices as well as costs associated with an 8-day shutdown at the company’s Haden smelter contributed to lower earnings. For the year ended Dec. 31, net earnings were $149.1 million ($3.60 per share) on revenue of $2.2 billion, down 35% from $231.2 million ($5.50 per share) on revenue of $2.2 billion in 1989.

Asarco Chairman Richard Osborne said the company’s financial results were “good considering the economic uncertainties that began to surface in the last half of the year.” He said the provision for environmental costs puts behind Asarco many of the uncertainties the company faces in that area.

Although prices for base metals have declined, they are still considered to be at satisfactory levels, and international markets are expanding. “The U.S markets are no longer the dominant consumers they once were,” noted Osborne. But, despite the economic uncertainties in the U.S., the outlook remains good, he said. Asarco (NYSE) 3 months ended Dec. 31 1990 1989 Revenue $549,900 $531,000 Net earnings 3,700 59,100

per share 0.10 1.42 12 months ended Dec. 31 Revenue $2,208,500 $2,210,800 Net earnings 149,100 231,200

per share 3.60 5.50