Record year for Falconbridge makes it a ripe takeover bet

Earnings reported by Falconbridge for the year ended Dec 31 were a record $341 million or $4.57 per share compared to $30 million or 42 cents per share at the same time last year. When extraordinary items are included, Falconbridge’s 1987 earnings were $73 million or $1.03 per share.

1988 revenues increased to $2.1 billion from $1.3 billion in 1987 as a result of all time high prices received for nickel, ferronickel, copper and zinc.

The company said it set records last year for nickel output from its Norwegian refinery, copper output from the Kidd Creek, Ont., operation and nickel shipments from Falconbridge Dominica.

Fourth quarter earnings of $124 million ($1.88 per share) compared to $43 million or 61 cents per share at the same time last year, also marked a record for the company.

Falconbridge increased its long term debt position to over $1 billion after securing a 24.7% block of its own shares from Placer Dome Inc. (TSE).

But by Dec 31, the nickel miner had succeeded in whittling down its long term debt to $816 million, giving it a debt to equity ratio of 41:59. That compares with $744 million and a ratio of 33:67 at the end of 1987.

With no end expected for the surge in base metal prices, Falconbridge is expected to become an even more attractive takeover target for suitors like Noranda Inc. (TSE) which holds a 19.9% stake in the nickel miner.

Noranda recently filed a notice with the Toronto Stock Exchange signalling its intention to acquire an additional 10% on the open market. But since shares of Falconbridge are trading at around $28.88, Noranda may wait for the issue to drop in price before adding to the shares it already owns.

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