Cyprus Amax posts profit before pretax writedowns

New York-listed Cyprus Amax Minerals would have turned in its highest third-quarter earnings ever, were it not for one complication: During the 3-month period, the company announced it would take pretax writedowns that would lead to a significant after-tax charge.

Before the writedown, the company reported a third-quarter profit of US$135 million (or US$1.41 per share), which marked an improvement over earnings of US$35 million (or 33 cents per share) reported for the same period in 1994.

However, on Aug. 24, the company was hit with an after-tax charge of US$338 million to recognize the writedown of coal assets and provisions for associated liabilities. On the upside, the company recorded US$13 million in after-tax earnings in the third quarter.

Including writedowns and special items, the company reported a third-quarter loss of US$203 million (or US$2.23 per share), compared with earnings of US$48 million (or 47 cents per share) for the same period in 1994.

The pre-writedown earnings were spurred by increased copper and molybdenum prices. The company sold copper at an average price of US$1.35 per lb., 21 cents higher than during last year’s third quarter.

For moly, Cyprus Amax realized US$6.83 per lb., which is well above the year-ago price of US$3.71.

The company sold 178 million lb. of copper, which represents an increase of 31 million lb. over the amount sold a year ago, and 15 million lb. of moly, which was down from the previous year.

Cyprus Amax produced 175 million lb. of copper and 17 million lb. of moly in the third quarter, compared with 163 million lb. of copper and 14 million lb. of moly a year ago.