Strong minerals division fails to halt Noranda loss

Sky high interest rates and a downturn in the Canadian forest industry were reflected in the 1990 financial results reported recently by Toronto-based Noranda(TSE).

Largely because of poor markets for forest products, Noranda reported a loss of $13 million or 15 cents a share in the forth quarter of 1989. Fourth quarter revenues also dropped to $2.3 billion from $2.4 billion in the same period last year.

“Substantial losses in our forest operations throughout 1990 more than offset the increased profits from our minerals and energy division,” said David Kerr, Noranda’s president and chief executive officer.

Now clearly the most profitable of Noranda’s four operating divisions, the mineral wing reported fourth-quarter earnings of $30 million compared with $21 million in the 1989 quarter.

That brought Noranda Minerals earnings for the year ended Dec. 31 to $217 million, up from $150 million in the previous year.

Although Noranda’s long-term debt has increased to $4.4 billion from $3.8 billion onm Dec. 31, 1989, Kerr has promised not ot reduce Noranda’s mining exploration budget.

In a recent interview with The Northern Miner, Kerr said $140 million would be available this year for exploration spending, about the same as the amount spent in 1990.

He also expects Noranda to weather the current finacial climate, (including high interest rates), that contributed to a $19-million fourth quarter loss in the forestry division.

Every 1% fluctuation in interests rates meaans a $20-million change in net earnings, while each 1 cent move in the dollar adds or subtracts $23 million to Noranda earnings.

A common dividend of 25 cents has been declared payable March 15 to Noranda shareholders of record Feb. 22. A price of $18.38 per share has been set for those electing to receive their dividends in stock.