Cominco has a good year under Teck

Call it luck, good timing or good management — all three helped Cominco enjoy a very successful first year under Teck control.

The luck Teck seems blessed with, good management it is renowned for, and the fortuitous rise in metal prices showed good timing when Teck led a consortium to purchase a controlling interest in Cominco from cp Limited early in the fiscal year.

Profits of the giant lead-zinc- copper producer soared to $172 million or $2.18 per share in 1987, including extraordinary gains of $91.3 million.

The extraordinary gains were realized from the sale of West Kootenay Power and Light Co. ($80 million), the public issue of shares by Cominco Resources International, adjustments to the 1986 restructuring provisions and previous years’ tax losses and deductions.

In 1986 the company reported a loss of $151.6 million or $2.53 per share, after including an extraordinary charge of $103.4 million.

Profits for the fourth quarter before extraordinary items amounted to $49.7 million, up from $1.4 million the year before. Sales in the quarter were $397.8 million compared with $337.3 million in 1986.

Cominco’s sales for the year were $1,306.1 million, compared with $1,327.5 million in 1986.

The mining and metals business had an operating profit of $188.1 million, up from $21.4 million in 1986. The improvement is attributed to higher metal prices and, in particular, earnings from the Highland Valley copper partnership.

The partnership is managed on a 50:50 basis by Cominco and Lornex. Following an agreement in January, 1988, to include the Highmont mine and mill, cash flow from the partnership will be shared 50% by Cominco, 45% by Lornex and 5% by Highmont. Cominco will receive $16.7 million from the partnership which will be paid by Lornex.

Cominco’s fertilizer operation made a profit of $15.6 million, compared with a loss of $18.9 million in 1986. With the exception of potash, fertilizer prices were down, but this was offset by higher sales volumes of potash, ammonia, urea and nitrogen-based fertilizers, as well as lower operating costs. During the year, the Kimberley fertilizer plant was closed, and the U.S. retail fertilizer operations were sold to Vigoro Industries for $14.8 million.

The company’s other operations had an operating profit of $4.6 million which reflected improved results from engineering services and electronic materials division. The 1986 operating profit of $20.9 million included results from electric power generation and steel fabricating. The power facilities were sold and steel fabricating operatings are no longer consolidated.