Inco turns profit in 1993

Red ink flowed in the last quarter of 1993, but Inco (TSE) turned a profit on the year.

Net earnings (unaudited) for last year amounted to US$28.2 million, compared with a net loss of US$17.6 million for 1992. During the fourth quarter, a net loss of US$38.2 million was recorded, compared with a net loss of US$28.9 million for the same 3-month period in 1992.

Inco’s realized nickel price for 1993, the key determinant of the company’s profitability, was the lowest since 1987. Prices averaged US$2.42 per lb. in the fourth quarter of 1993 and US$2.72 for the year, a decrease of 20% from prices realized in the corresponding periods of 1992.

The London Metal Exchange (LME) cash nickel price averaged US$2.15 per lb. in the fourth quarter of 1993 and US$2.40 for the year, reflecting the continuing record levels of nickel inventories held by the LME, which reached 274 million lb. at Dec. 31, 1993.

Inco reduced its nickel production last year by 33 million lb. from 1992 levels. It also announced production shutdowns for 1994, which are expected to reduce nickel production by 40 million lb. in the first quarter. The LME cash price for nickel, which reached a 6-year low of US$1.82 last September, was recently trading in the US$2.70 range.

Helping to strengthen Inco’s bottom line in 1993 was the sale (for a third-quarter, after-tax gain of US$127.9 million) of its 61.8% interest in gold producer TXV Gold.