Interest payments hit Cameco profits

Interest payments on longterm debt resulted in a $33-million drop in earnings reported by uranium producer Cameco in Saskatoon, Sask. The company said its 1989 earnings declined to $23.5 million from $56.3 million in 1988. Revenues in 1989, however, increased significantly to $319.5 million from $236.5 million last year. “An increase in interest expense on the $650 million which Cameco paid to its founders in 1988 as part of a merger consideration accounts for much of the earnings’ shortfall,” says chief financial officer Tom Gorman. Cameco is owned jointly by the Province of Saskatchewan with 61.5% and the federal government with 38.5%.

“Revenues were also affected by a decline in spot prices throughout the year,” he says. As 70% of Cameco’s uranium sales are made in U.S. dollars, a decline in spot prices throughout the year was compounded by a stronger Canadian dollar relative to the U.S. dollar, according to Gorman.

However, he says Cameco’s long-term debt has dropped by 18% to $515 million from $626 million in 1988. “Our debt over equity percentage at 62% is still too high but a real improvement over the 72% at Dec. 31, 1988,” Gorman says. The company has 10 million shares outstanding.

Efforts to enhance efficiency and reduce operating costs in 1989 resulted in Cameco becoming operator of the Key Lake uranium mine in northern Saskatchewan. Cameco (unlisted) Year ended Dec. 31 1989 1988 Revenue (000s) $319,500 $236,500 Net earnings (000s) 23,500 56,300 Net earnings

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