Although Sherritt International (S-T) had a strong third quarter, the company says it will cut back on spending in the New Year as it braces for much weaker fourth quarter results.
Sherritt earned $133.1 million in the third quarter, up from $65.4 million in the same period last year. Overall revenue was $477.2 million compared to $301.3 million in the third quarter in 2007.
The company had record-setting operating results in its coal, oil and gas operations, which more than offset the impact of lower nickel prices.
Sherritt’s average coal price was US$87.19 per tonne in the third quarter, 73% higher than last year, bringing in revenue of $39.3 million.
The average oil prices in Cuba and Spain were 64% and 50% higher, respectively, increasing revenue from oil and gas to $112.9 million.
Nickel prices, on the other hand, were 35% lower in the third quarter compared to 2007, decreasing revenue to $137.5 million from $150.7 million.
Sherritt says it plans to bring its spending in line with its projected cash flow generation of its operations and available project-specific facilities to keep its balance sheet and liquidity position strong.
The company will suspend $270 million in capital for the Moa/Fort Saskatchewan expansion project. It also plans to lower its forecast in sustaining capital expenditures in 2009 and reduce controllable operating expenses by at least 15%. Sherritt also plans to do a review of costs and reevaluate expansion schedules for its Ambatovy nickel project in Madagascar and its power joint venture in Cuba.
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