Strengthened Noranda looks for even better year in ’88

First-quarter results by Noranda Inc. (TSE) picked up where they left off at the end of 1987, with the diversified resources company recording net earnings of $129 million, or 66 cents per share, compared with $30 million, or 14 cents per share, for the same 3-month period a year ago.

For all of 1987, the company reported net earnings (after unusual items) of $343.5 million, or $2.14 per share, on revenues of $7.4 billion. Those figures compare with net earnings in 1986 of $43.3 million, or 2 cents per share, on revenues of $6.2 billion.

“While markets and prices for resource products can and do change abruptly, at the moment we can see nothing on the horizon that would suggest a significant weakening over the balance of the year,” Chairman Alfred Powis told shareholders at the annual meeting.

“There are worries about the B.C. stumpage situation and labor negotiations, as well as the value of the Canadian dollar. However, barring a recession and assuming these problems don’t get out of hand, 1988 should be a good year.”

Last year’s improvement is attributed by the company to stronger markets for various products, continued productivity improvements, lower interest costs and, with one exception, no strikes.

Noranda has four basic operating divisions — forestry, minerals, energy (oil and gas) and manufacturing — employing more than 44,000 people.

The metals and minerals division, second to forest products in terms of earnings, returned $141.3 million (before unusual items) in 1987 on the strength of higher prices for precious and base metals. In 1986, the division reported earnings of $16.4 million. Producing mines

Noranda Minerals counts 13 producing mines and five metallurgical plants among its assets. One of its affiliates is Hemlo Gold Mines (TSE), which it controls and which operates the successful Golden Giant gold mine at Hemlo in northern Ontario.

Exploration continues to play a major role in the company’s activities. While grass-roots projects in which Noranda has interests received $80 million in financing last year, for 1988 that total will jump to $100 million, Keith Hendrick, president of Noranda Minerals, said. In addition, $60 million has been budgeted this year for active projects operated by the company and its major affiliates.

Extensive exploration work is planned this year, Hendrick said, on such discoveries as the copper- zinc deposit of Duck Pond in Newfoundland, the Tundra gold deposit in the Northwest Territories and the Silidor gold project located near Rouyn-Noranda, Que. New acid plant

Also high on the company’s agenda is environmental protection, Hendrick said, mentioning the acid plant under construction at the Horne smelter at Rouyn-Noranda. “It will be our sixth acid plant and will produce 350,000 tonnes per year of sulphuric acid from gases currently emitted into the atmosphere,” he said. “When the plant is fully operational in 1990, the volume of SO2 emissions will be less than half the 1980 level.”

Another of the company’s priorities, Hendrick said, is drainage waters from waste rock and mine tailings.

Meanwhile, the parent company, Noranda Inc., has been working hard to reduce its debt and, according to Powis, has succeeded. During the past 2 1/2 years, he said, the Noranda group’s net debt was reduced by about $2.4 billion through a combination of asset sales, financings and earnings.

With its debt under control, the company is able to ease its restraints on capital spending, and to that end, Powis said Noranda Inc. is planning capital spending this year of more than $1 billion, 2 1/2 times the level two years ago.

Exchange rates movements, Powis said, are working against economic recovery in Canada. The change in the American-Canadian exchange rate since the start of 1987, he said, has decreased Noranda’s annual earning power by about $100 million after taxes. He told reporters after the meeting that a 1 cents hike in the Canadian dollar, comparable to the U.S. dollar, costs Noranda $16 million in profit after taxes.