Easing nickel prices behind lower Inco profit

For the half, Inco realized a record profit of $472 million or $4.44 per share. The results for the period reflected an easing in nickel prices which averaged $5.97 per lb in the second quarter as compared with $6.59 in the first quarter, Inco says. Average realized copper prices also declined to $1.15 per lb from $1.39 per lb in the first quarter.

As a result of the continuing tight nickel supply situation, Inco made substantial purchases of nickel on the open market in order to satisfy certain customer delivery requirements. As a result of the purchases, nickel deliveries increased to a record 133 million lb for the period. First half deliveries totalled 260 million lb. Revenues for the half were also a record, totalling $1.8 billion.

During the period, Inco experienced higher costs at its Ontario division due to a collective bargaining deal struck last year between the company and its unionized employees. Higher costs were also encountered due to the re-opening of the Crean Hill and Shebandowan nickel mines. In Manitoba, higher unit costs were realized due to the processing of arsenic-rich ores and higher employee bonuses.

A share buyback plan was also introduced which resulted in the purchase and cancellation of 1.34 million common shares at a cost of $39.7 million. Last April, Inco announced a plan to buy up to two million of its common shares.

As at June 30, the company had total debt of $1.33 billion and a debt to equity ratio of 54:46. Marketable securities totalled $262 million. A quarterly dividend of 20 cents per share has been declared payable on Sept 1 to shareholders of record on August 4.

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