(Reuters) - Canadian uranium producer Cameco Corp (CCO.TO) reported an 85 percent drop in quarterly profit on Friday on lower sales volume, higher costs and a one-time charge for a canceled sales contract, sending its shares lower.
Sales volume fell 16 percent in second quarter, but the world’s largest publicly traded uranium miner said it still plans to sell some 31 million to 33 million pounds of uranium this year.
“Uranium sales, obviously, were below expectations but Cameco maintained its guidance for the year,” said Edward Sterck, an analyst at BMO Capital Markets.
“We’ve seen for this for the last three years now, with sales being heavily biased to the fourth quarter,” he said. “So I think the market really ought to be used to that by now.”
Cameco’s Toronto-listed shares fell 3.2 percent on Friday after the company said it earned C$8 million ($7.9 million), or 2 Canadian cents a share, in the quarter ended June 30. That compared with C$55 million, or 14 Canadian cents a share, in the year-earlier period.
When adjusted to remove a C$30 million one-time charge related to a canceled sales contract, earnings were C$34 million, or 9 Canadian cents a share.
That was well below consensus expectations of 24 Canadian cents a share based on information compiled by Thomson Reuters I/B/E/S from 12 analysts.
Revenue fell 8 percent to C$391 million on lower sales and an 8 percent drop in the realized uranium price to $42.08 a pound. Costs rose 13 percent to C$33.49 a pound from C$29.61 a pound in the second quarter of 2011.
“We saw some declines in our results this quarter, but we are in line to deliver on our sales, revenue and production guidance for the year” said Chief Executive Tim Gitzel in a statement.
“We continue to pursue our growth plans with an eye to the demand growth we see on the horizon,” he added.
Cameco’s shares were down 73 Canadian cents at C$21.91 late on Friday morning on the Toronto Stock Exchange. The stock is up more than 15 percent this year as the company has regained some of the value lost in the aftermath of the Fukushima nuclear disaster in Japan last year.
Reporting by Julie Gordon; Editing by Gerald E. McCormick; and Peter Galloway