Cameco Corp. beats estimates, BMO raises target on improve balance sheet

Production cuts and some price gains helped Cameco Corp. post a better-than-expected profit in its latest quarter, but it said industry headwinds remain.

“You will see from our results that we had a strong finish to 2018,” CEO Tim Gitzel told on a conference call Monday.

“That said, and as we expected, our 2019 outlook points to a weaker performance from a gross profit point of view.”

The uranium producer has been struggling for years with a sluggish market for yellowcake. Last year, it temporarily halted production at its McArthur River mine and later made the shutdown permanent as it and other producers looked to cut back on supply.

The drop in supplies from Cameco and others, and some increased demand, have helped boost spot market prices by about 20 per cent since the start of 2018, but long-term orders have lagged.

The company relied more on stockpiles because of the mine shutdown, leaving its inventories at about a third of where they were at the start of 2018. The drop in inventories and a tough outlook will mean more challenges for next year, Gitzel said.

“We will continue to generate cash from operations in this difficult time. However, the cash generated will not be as robust as in 2018, given the weaker outlook and without the release of working capital associated with the inventory drawdown in 2018.”

The lack of cash flow is a challenge, said BMO Capital Markets analyst Alexander Pearce, but he raised the target price for the company by a dollar to $17.50 on a strengthened balance sheet, a potential settlement with a Japanese utility and a rising uranium price.

“We continue to have reasons to be positive on the stock,” said Pearce in a note.

The company reported Friday a profit of $160 million for the quarter ending Dec. 31, compared with a loss of $62 million for the same quarter a year earlier.

Adjusted net earnings were $202 million, or 51 cents per share, compared with adjusted earnings of $181 million or 46 cents per share for the same quarter in 2017.

The adjusted earnings were well ahead of analyst expectations of 23 cents per share for the quarter, according to Thomson Reuters Eikon.

The company got a boost last year with a court victory against a major Canada Revenue Agency tax dispute, but a U.S. review of uranium imports continues to loom.

Gitzel said on the call that he has been down to Washington D.C. more times in the last six months than in the 10 years prior as the company looks to avoid tariffs or restrictions on uranium imports from Canada.

“We’re heavily involved, obviously, trying to find a solution that might work for everybody. And it’s really in no one’s interest to put hurt on the utilities.”

Just Posted

1,200 runners came out to Woody’s RV Marathon in Red Deer

Red Deer’s Matthew Hope ran in the Woody’s RV World Marathon for… Continue reading

Two men steal 16 year old’s car at gunpoint in Alberta

RCMP are looking for two men who allegedly produced a handgun and… Continue reading

Mother of five who died in hit and run in central Alberta a huge loss to family, police say

Rocky Mountain House RCMP continue to investigate hit and killed case on… Continue reading

‘Rope-a-dope’: Environmentalists say Alberta war room threat won’t distract them

EDMONTON — Environmental groups targeted by Alberta Premier Jason Kenney are shrugging… Continue reading

Speed, alcohol considered factors in deadly Calgary crash: police

CALGARY — The Calgary Police Service says two people are dead after… Continue reading

WATCH: First Red Deer Market of 2019

The event is held every Saturday in the Servus Arena parking lot

Cast your votes for the Best of Red Deer

Nominations for the Best of Red Deer Readers’ Choice Awards are officially… Continue reading

Speaker stuns Morehouse grads, to pay off $40M student debt

A billionaire technology investor stunned the entire graduating class at Morehouse College… Continue reading

Unions increasingly at odds over replacing troubled Phoenix pay system

OTTAWA — The federal team charged with finding a replacement for the… Continue reading

Sisters of Ste-Anne hold unique garage sale before giving up Montreal convent

MONTREAL — The Montreal-area Sisters of Ste-Anne are hosting a unique garage… Continue reading

Canadian pilot Patrick Forseth killed in Honduras plane crash: sister

TRUJILLO, Honduras — A British Columbia woman says her pilot brother was… Continue reading

As states pass restrictive abortion laws, questions surface

ATLANTA — As multiple states pass laws banning many abortions, questions have… Continue reading

Pelosi being honoured with JFK Profile in Courage Award

BOSTON — House Speaker Nancy Pelosi is being honoured with the 2019… Continue reading

India’s marathon national election reaches the finish line

KOLKATA, India — Voting in India’s mammoth national election ended Sunday with… Continue reading

Most Read