While a shift in emphasis to aluminum from molybdenum production continues to pay off for New York-based resource giant Amax (TSE), the company’s earnings were down from last year’s record levels. Amax reported net earnings of US$360 million or US$4.19 per share for the year ended Dec. 31, compared with US$741 million or US$8.42 per share during the same period in 1988.
A 30% drop last year in the market price of uranium was among the factors that contributed to the significant gap between 1989 and 1988 results.
According to Amax, 1988 earnings included a non-recurring pretax gain of US$164 million on the sale of a 25% interest in two primary aluminum plants and a US$125- million gain from a federal income tax settlement, the company said.
Of the US$3.9 billion in sales reported by Amax in 1989, about 60% of that amount was attributable to wholly owned Alumax, the third largest integrated aluminum company in the U.S.
Amax’s Climax Molybdenum subsidiary accounted for 13-14% of 1989 sales figures, which were almost unchanged from the previous year.
Fourth-quarter net earnings were US$58 million or US67 cents per share compared to US$288 million or US$3.50 per share a year. However, Amax’s fourth-quarter sales declined slightly to US$903 million from US$999 million in the 1988 period.
In 1989, Amax succeeded in reducing its debt-to-capital ratio to 31%, its lowest point in 15 years, said Chairman Allen Born. The company also benefited from its coal and gold interests which include an 87% stake in Amax Gold (TSE) of Denver, Colo.
One of North America’s lowest cost producers, Amax Gold churned out 307,387 oz. of the yellow metal in 1989 at a cost of US$132 per oz. Amax (TSE)* Year ended Dec. 31 1989 1988 Revenue (000s) $3,892,000 $3,944,000 Net earnings(000s) 360,400 740,900 Net earnings
(per share) 4.19 8.42 *US dollars
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