Cameco books record output amid integration hurdles, supply chain strains

Cameco (TSX: CCO; NYSE: CCJ), Canada’s uranium giant, had mixed results in 2024. While it achieved record output, the company faced challenges with acquisition integration and supply chain issues.

For the 12 months ended Dec. 31, revenue surged to $3.1 billion—a 21% increase over 2023’s $2.6 billion—while cash provided by operations climbed to $905 million from $688 million last year. Yet, net earnings dropped significantly, nearly halving to $172 million from $361 million in 2023. Adjusted net earnings, stripping out one-off expenses, dropped by 24% to $292 million from $383 million. In sharp contrast, adjusted EBITDA leaped 73%, from $884 million in 2023 to $1.5 billion last year.

“Our 2024 full-year financial performance benefitted from strong Q4 results delivered by our uranium and Westinghouse segments,” Cameco president and CEO Tim Gitzel said in a release on Thursday. “Although both net earnings and adjusted net earnings in 2024 were lower than in 2023 primarily due to the impact of purchase accounting related to the Westinghouse acquisition, our other key financial metrics improved significantly,” said Gitzel, who was named The Northern Miner’s Mining Person of the Year for 2023.

Cameco’s full-year results come amid a tightening global uranium market. Power utilities around the world are signing long-term contracts. They want to secure supply due to years of underinvestment, rising geopolitical concerns and increased demand for zero-emissions power. Meanwhile, spot uranium averaged about US$85 per lb. and long-term prices rose 19% over the year to settle above US$80.

BMO Capital Markets mining analyst Alexander Pearce noted on Thursday that Cameco’s Q4 results “slightly disappointed overall.” This was due to a lower Westinghouse contribution and higher corporate costs.

Record output

In the current uranium price environment, Cameco’s record 20.3 million lb. production at the McArthur River/Key Lake mine and steady output at Cigar Lake in Canada’s Athabasca Basin offer a counterbalance to its integration challenges at Westinghouse. Supply hiccups at JV Inkai with Kazakh-state run Kazatomprom (LSE: KAP), the world’s largest uranium miner, also weighed on results.

Cameco’s total uranium output rose 6.3% year-on-year to 33.6 million lb., compared with 31.6 million lb. in 2023. But, production from JV Inkai declined by about 7%, or 600,000 lb., to 7.8 million lb. due to supply disruptions in sulphuric acid deliveries.

After opening 4.2% higher at $69.00 in Toronto, by Thursday afternoon Cameco shares were trading 0.4%, or 27¢ in the red at $65.92 apiece. Shares have touched $48.71 and $88.18 over the past 12 months. The world’s second-largest uranium producer has a market capitalization of $28.7 billion.

Nuclear services

Cameco’s US$7.9 billion acquisition of Westinghouse Electric in 2022, aimed at deepening its role in nuclear fuel cycle services, has added further complexity over the period. Westinghouse posted a full-year net loss of US$218 million (on Cameco’s share), though its underlying strength was evident with an adjusted EBITDA contribution of US$483 million.

“Our record production at McArthur River and Cigar Lake demonstrates our operational strength, but the challenges in integrating Westinghouse and addressing supply chain issues at JV Inkai are areas we are tackling with utmost priority,” Gitzel said.

Market uncertainty

For the rest of the year, Cameco expects production at both McArthur River/Key and Cigar Lake to remain steady at roughly 18 million lb. each. The company said that higher uranium purchase volumes and increased capital spending are coming soon. These factors may put more pressure on uranium oxide prices.

The company expects uranium sales to be higher than forecasted. However, production at key assets may drop a bit. This adds pressure to an already complex cost structure. Cameco must rely more on external purchases due to lower production compared to demand. In a tight market, this rising demand could drive up spot prices, the company noted.

BMO’s Pearce noted that Westinghouse’s EBITDA growth will be lower than expected. This raises questions about whether the company’s diverse strategy can offset rising capex and operational challenges.

“In these challenging times, resilience and adaptability are not just strategies—they are the cornerstones of our future,” Gitzel said.