Nickel prices lift Inco to record

The profits keep rolling in for Inco Ltd. (TSE), which has recorded its third consecutive record for quarterly earnings.

The nickel giant reported net earnings for the third quarter of $200.3 million ($1.88 per share) on total income of $837 million, compared with $41.4 million (36 per share) on income of $422 million for the same quarter in 1987. (All figures are in U.S. currency.)

Earnings for the first nine months of 1988 were also a record $516.4 million ($4.86 per share) on total income of $2.4 billion, compared with $50.2 million (39 per share) on income of $1.25 billion.

Third-quarter and 9-month results in 1988 include extraordinary credits of $12.9 million and $27.8 million respectively, or 12 per share in the third quarter and 26 per share to Sept 30, from utilization of prior years’ tax losses.

This year’s third-quarter results also include a net gain of $44.2 million from the sale of a 20% equity interest in P.T. International Nickel Indonesia in the Far East, and an additional provision for Manitoba mining taxes of $16.5 million resulting from recent legislation which is retroactive to the first of the year. About $11 million of this provision for additional mining taxes applies to the first six months of 1988. Higher nickel, copper prices

The company attributes the improvement in its primary metals business in the third quarter and the first nine months (compared with 1987) to the significant increases in both primary nickel and refined copper price, partly offset by higher unit costs and expenses.

During the third quarter, Inco realized a nickel price of $5.50 per lb, and for the 9-month period $4.72 per lb, compared with $2.27 and $2.01 for the same periods last year. The copper price realized during the quarter was 97 per lb and for the 9-months $1.02, compared with 78 and 68 for the same periods in 1987.

Inco reports its finished nickel inventories were reduced from 63 million lb at June 30 to 50 million lb at Sept 30, reflecting continuing strong demand and the planned vacation shutdowns which occurred during the third quarter. The company says its nickel deliveries during the first nine months of 1988 were the highest achieved for this period since 1974.

During the first nine months, Inco generated an internal cash surplus of $619 million, of which $59 million was utilized to redeem preferred shares and $157 million to repay debt. At Sept 30, the company had $457 million in cash and marketable securities, an increase of $256 million from June 30, and total debt had been reduced to $721 million.

In late November, Inco shareholders will be asked to vote on a recapitalization plan which management is recommending as a means of attempting to fend off possible future takeover bids. Management says the plan, which analysts have dubbed a “poison pill” and which would give shareholders a special cash dividend of $10 per share, would help prevent a takeover bid which would not offer full and fair value to shareholders.

Inco plans to pay for the $1 billion dividend payout with cash on hand and a $500 million loan. If the plan is approved, Inco will double its current debt.