Skip to main content

Cameco president and chief executive officer Tim Gitzel speaks with media following the company's annual general meeting in Saskatoon, in May, 2014.

Liam Richards/The Canadian Press

Production cuts and some price gains helped Cameco Corp. post a better-than-expected profit in its latest quarter, but it said industry headwinds remain.

“You will see from our results that we had a strong finish to 2018,” chief executive Tim Gitzel said on a conference call Monday.

“That said, and as we expected, our 2019 outlook points to a weaker performance from a gross profit point of view.”

Story continues below advertisement

The uranium producer has been struggling for years with a sluggish market for yellowcake. Last year, it temporarily halted production at its McArthur River mine and later made the shutdown permanent as it and other producers looked to cut back on supply.

The drop in supplies from Cameco and others, and some increased demand, have helped boost spot market prices by about 20 per cent since the start of 2018, but long-term orders have lagged.

The company relied more on stockpiles because of the mine shutdown, leaving its inventories at about a third of where they were at the start of 2018. The drop in inventories and a tough outlook will mean more challenges for next year, Mr. Gitzel said.

“We will continue to generate cash from operations in this difficult time. However, the cash generated will not be as robust as in 2018, given the weaker outlook, and without the release of working capital associated with the inventory drawdown in 2018.”

The lack of cash flow is a challenge, said BMO Capital Markets analyst Alexander Pearce, but he raised the target price for the company by a dollar to $17.50 on a strengthened balance sheet, a potential settlement with a Japanese utility and a rising uranium price.

“We continue to have reasons to be positive on the stock,” Mr. Pearce said in a note.

The company reported Friday a profit of $160-million for the quarter ending Dec. 31, compared with a loss of $62-million for the same quarter a year earlier.

Story continues below advertisement

Adjusted net earnings were $202-million, or 51 cents a share, compared with adjusted earnings of $181-million or 46 cents a share for the same quarter in 2017.

The adjusted earnings were well ahead of analyst expectations of 23 cents a share for the quarter, according to Thomson Reuters Eikon.

The company got a boost last year with a court victory against a major Canada Revenue Agency tax dispute, but a U.S. review of uranium imports continues to loom.

Mr. Gitzel said on the call that he has been down to Washington more times in the past six months than in the 10 years prior as the company looks to avoid tariffs or restrictions on uranium imports from Canada.

“We’re heavily involved, obviously, trying to find a solution that might work for everybody. And it’s really in no one’s interest to put hurt on the utilities.”

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter