Cooler base metal climate reflected in Inco results

The boom in base metal prices which appears to have fizzled out for the time being was reflected in the annual earnings reported recently by Toronto-based Inco (TSE). Inco’s earnings for the year ended Dec. 31 were a record US$753.4 million or US$7.11 per share, compared with US$735.4 million or US$6.92 per share at the same time last year.

The western world’s largest nickel producer also reported an increase in 1989 net sales to US$3.95 billion from US$3.263 billion in 1988.

However, the recent drop in the price of nickel to about US$2.80 a pound from USUS$7.23 a pound at the end of December, 1988, has prompted Inco to announce production cutbacks through the elimination of overtime at its Ontario and Manitoba divisions.

Fourth-quarter earnings fell to US$152.1 million or US$1.44 per share from US$219 million or US$2.06 per share during the same period last year. According to the nickel miner, 1989 fourth-quarter results included a gain of US$60.7 millon (US$47 million after tax), from the sale of a 30% equity interest in Tokyo-based metals marketing company Shimura Kako Co.

“The company’s performance over the past two years has been exceptional,” said President and Chief Executive Officer Donald Phillips.

“Inco earned over US$14 a share, paid out US$11.55 a share in common dividends and invested more than US$600 million in important capital programs.”

The 514 million lb. of nickel which Inco delivered in 1989 (compared with 495 million lb. in 1988) was the highest achieved since 1974, the company said. Inco’s copper deliveries were also up to 278 million lb. from 256 million lb. at the same time last year.