Three quarters of profit Noranda caps red ink flow

Keeping a tight lid on the red ink for the third straight quarter, Noranda Inc. has emerged with a profit of $52.9 million on revenues of $2.6 billion for the recent 9- month period and appears to be heading for a profitable year-end, its first since 1981.

Share profit for the nine months ended Sept 30 amounts to 16 cents , compared with a net loss of 67 cents per share for the comparable 1985 9- month period when this forestry and mining giant posted a net loss of $54.9 million on revenues of $2.6 billion.

The results are after unusual gains that totalled $26.5 million in this year’s period and $17.3 million in the 1985 period.

Looking specifically at the third quarter, net earnings were $4.7 million on revenues of $830.1 million after nil unusual items. In last year’s third quarter a net loss of $30.6 million was posted on revenues of $788.7 million after unusual items of $17.3 million.

Results in all divisions were better this quarter than the previous year due to somewhat better markets. The metals and minerals division profited from the good performance at the new Hemlo gold operation and realized net earnings of $5 million compared with a loss of $19.4 million in the year- earlier period.

Forest products netted $26 million in the third quarter versus $7.4 million in the year-earlier period.

Over-all third quarter results would have been somewhat better, the company says, had it not been for labor problems. The quarter was affected by three strikes. One at Canadian Electrolytic Zinc which began in early June, a second at the B.C. lumber operations which began in late July and a third at Noranda Aluminum which began in late August. All the strikes were still ongoing at the end of the quarter, although a settlement was reached in mid-October at Noranda Aluminum.

As well, results of the metals and minerals group were affected by summer shutdowns and an extremely weak potash market, the company notes.

This quarter saw the continuation of the debt-reduction program. The largest item was a transaction that provided a return of the $210- million net investment at the Hemlo gold operation without affecting Noranda’s equity interest.

In additon, $150 million of series C convertible preferred shares were sold and an offer was made to exchange a further $358 million of these shares for the outstanding series A preferred shares otherwise retractable in September. Some $50 million of these shares were retracted so that a net of about $100 million of new capital was raised through this transaction.

There are now outstanding $19 million of series A preferred shares and $438 million of series C.

A dividend of 12.5 cents per share has been declared payable Dec 11 to shareholders of record Nov 7. For shareholders who elect to receive their dividends in stock, a price of $19.63 per share has been established.

While present market conditions are mixed, the company notes they are better than they were a year ago. Given an early resolution of the remaining labor disputes, fourth quarter results should improve and the year as a whole will be profitable.