Noranda improves bottom line

Lower operating costs and higher metal production translated into higher income for Noranda (NOR-T) in the first half of the year.

Earnings during the six months ended June 30 topped $34 million (or 10 cents per share) on sales revenue of $3.03 billion, up $16 million and down $37 million, respectively, from the first half of 1998. (The 1998 results exclude $620 million gained from the sale of Norcen Energy Resources.)

Cash from operations jumped to $288 million from $239 million, or to $381 million from $118 million after changes in working capital.

Noranda attributes the improvement to two factors: an overall reduction in operating costs and a better operating performance by Falconbridge (FL-T), with which it is affiliated. Also, a weaker Canadian dollar helped offset lower realized metal prices.

For the three months ended June 30, the major earned $30 million (or 10 cents per share) on $1.59 billion, compared with earnings of $28 million (or 10 cents per share) on $1.55 billion in the corresponding period of 1998.

Cash from operations before changes in working capital climbed to $163 million from $131 million between the two periods. Including changes in working capital, the cash figure slipped to $40 million from $78 million.

As part of a restructuring program, Noranda recently sold its medical detectors, pure metals and electronic powders businesses. Meanwhile, expansion programs are under way at various operations, and the company recently commissioned the Bell-Allard zinc-copper mine in northern Quebec.

Noranda has so far invested $559 million in its various projects this year ($132 million for Antamina and $140 million for Magnola). Despite this, the major’s consolidated net debt as a percentage of total capitalization remains relatively unchanged, at 26%, and it had $1.1 billion in cash at the end of the second quarter.

A dividend of 20 cents will be paid to shareholders in mid-September.