Cameco’s Q1 Profit Sinks 38%

Higher production costs in its uranium business chipped away at Cameco’s (CCO-T, CCJ-N) profits in the first quarter of 2009.

Cameco earned $82 million or 22¢ a share, down 38% from the $133 million or 37¢ a share it cleared in the year-earlier period.

The uranium giant, which also has gold assets and a fuel services business, said its adjusted net earnings amounted to $89 million, or 24¢ a share, after deducting onetime items such as the restructuring of its gold business.

Revenue rose 4% year-on-year to $615 million.

In its uranium business, revenues fell slightly to $336 million from $338 million and profits dropped to $116 million from $169 million. A 5% increase in realized selling prices offset a 4% drop in sales.

Uranium production climbed 26.3% to 4.8 million lbs., but the average realized price fell to US$36.71 per lb. from US$40.85 per lb. a year earlier.

Higher production costs were caused by a combination of lower production in 2008, recent purchases at market prices, higher royalties and increased input costs, the company reported.

Looking ahead, Cameco anticipates it will post 2009 sales of 32- 34 million lbs. U₃O₈ compared with its previous estimate of 31-33 million lbs. It forecasts revenues from uranium this year to fall 2-5% year on year.

The Saskatoon, Sask.-based uranium major also says it expects to buy additional uranium at higher prices than its cost of production to take advantage of trading opportunities. Because of this, the company’s overall cost of product sold is forecast to go up by 15-20% year-on-year, compared with its previous estimate of a 5-10% increase.

On the financial results, Cameco closed up $1.76 or 6.42% at $29.76 per share with nearly 2 million shares changing hands.

The company has a 52-week trading range of $14.33-44.38 per share and 392.5 million shares outstanding.