Inco squeaks out third-quarter profits

Despite the precipitous decline in prices for nickel, copper and platinum-group metals, Inco (N-T) still managed to bank a US$33 million profit on sales revenue of US$434 million during the third quarter. This compares with earnings of US$62 million on revenues of US$642 million during the same period last year.

On a per-diluted-share basis, earnings fell from US29 to US14.

Quarter over quarter, Inco’s averaged realized price for nickel fell to US$2.80 per lb. from US$3.92 per lb. while realized copper prices dropped to US70 per lb. from US91 per lb.

Nickel production was lower in the third quarter due to unexpected disruptions at operations in Sudbury, Ont. and Clydach, Wales. Demand for nickel also fell owing to reduced activity in the stainless steel industry and weakness in the electronic and telecommunications industries of Japan.

This was somewhat offset by deliveries of platinum-group metals and lower nickel unit cash cost of sales.

“The economic downturn continues to have a negative impact on nickel demand and prices,” said Scott Hand, Inco’s Deputy Chairman and Chief Executive Officer, in a prepared statement. “While we are disappointed with the current soft market conditions, our financing plan was built to withstand them and accommodate our project development plans,” he added.

Cash flow generated from operating activities before changes in working capital was $114 million in the third quarter of 2001, up from $110 million in the corresponding 2000 period.

Capital expenditures were US$71 million in the third quarter of 2001, compared with US$59 million in the corresponding 2000 quarter. The increase was primarily due to increased spending on the Goro project.

Total debt was US$845 million at Sept. 30, 2001, down from US$1.03 billion at Dec. 31, 2000.

Inco has declared a dividend of US$0.6875 per share for the 5.5% convertible redeemable preferred shares (Series E), payable December 3, for the quarter ending Nov. 30, 2001, to shareholders of record on November 5.