Cameco expected to report annual loss after markets close Thursday
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: February 8, 2017 | Last Updated: February 8, 2017 4:27 PM CST
Cameco Corp.’s McArthur River mine in northern Saskatchewan. CAMECO CORPORATION / SASKATOON
After a year spent cutting costs in the face of soft uranium prices, which have been in freefall since the 2011 Fukushima Daiichi nuclear disaster, Cameco Corp. is expected to report an annual net loss after markets close on Thursday.
The Saskatoon-based company took the unusual step last month of announcing that, due to one-time costs of between $180 and $220 million, it expects to record a loss and adjusted earnings “significantly lower” than analysts’ estimates.
“You don’t like to let that disconnect continue, and for that reason we decided to provide some guidance,” Cameco spokesman Gord Struthers told the Saskatoon StarPhoenix on Jan. 17.
The “unusual non-recurring costs” are a result of the company’s decisions to shutter its Rabbit Lake mine last April, curtail its U.S. in situ recovery operations and reduce its corporate workforce by about 10 per cent, Struthers said.
“In addition, the persistent weak uranium price has required us to impair some of the assets that we own, and those show up as fairly large numbers, and for that reason … we’re going to report a loss for 2016.”
Scotia Capital Inc. analyst Orest Wowkowdaw said in a note to investors this week that market conditions led him to conclude that “the risk of a material cut to (Cameco’s) common share dividend is growing.”
At the end of November, Cameco reported net earnings of $83 million on revenues totalling $1.54 billion for the first nine months of 2016. In 2015, the company made $65 million on $2.75 billion in revenue.
Meanwhile, Cameco continues to grapple with weak uranium prices. It is in the midst of laying off about 120 staff from three northern Saskatchewan operations, and is in a dispute with a Japanese utility over a cancelled contract worth $1.3 billion.
The company, which is also embroiled in a major tax trial, maintains that prices will recover as reactor restarts in Japan and new nuclear plants under construction around the world drive up demand for its nuclear fuel.