April 30, 2008 / 1:08 PM / in 9 years

UPDATE 2-Sherritt profit flat, held back by nickel prices

(Adds details from conference call, changes dateline from Ottawa)

TORONTO, April 30 (Reuters) - Sherritt International Corp (S.TO) reported a flat first-quarter profit on Wednesday, as weaker nickel prices offset higher nickel shipments and stronger oil and cobalt prices.

The Toronto-based company, which has power, oil, metal and hotel investments in Canada, Cuba and Madagascar, earned C$89 million ($88.1 million), or 38 Canadian cents a share, in the quarter.

That compared with earnings of C$89.1 million, or 52 Canadian cents a share, in the year-before period when it had a smaller share count.

Revenue was C$314.2 million, up from C$310.1 million.

Nickel production rose to 3,749 tonnes from 3,514 tonnes, but realized prices plunged to C$12.93 a pound from C$21.84.

Cobalt production dipped to 407 tonnes from 434 tonnes as realized prices rose to C$46.13 a pound from C$30.02.

Oil and gas sales rose to C$87.5 million from C$58.4 million, as realized prices jumped 49 percent year-over-year. Coal revenue rose 56 percent to C$30.9 million.

Sherritt has been spending heavily to develop the Ambatovy nickel project in Madagascar, and is also wrapping up its acquisition of the rest of Royal Utilities Income Fund RU_u.TO, of which it previously owned 41 percent.

In a release late on Tuesday, Sherritt said 98 percent of the units it did not already own had been tendered to its offer of about C$700 million.

“The acquisition will position us as Canada’s largest thermal coal company as well as create a more conservative balance sheet and internalize important cash flow streams that will help us to fund our growth objectives,” Chief Executive Jowdat Waheed said on a conference call with investors and analysts on Wednesday.

Sherritt said it expects to produce about 32,500 tonnes of nickel and 3,500 tonnes of cobalt this year, while capital costs an Ambatovy are seen at C$1.6 billion for 2008 and C$450 million for the second quarter.

The company acquired its 45 percent stake in Ambatovy when it took over Dynatec last year. The project is expected to be completed in 2010.

Sherritt shares were down 6 Canadian cents at C$14.33 on the Toronto Stock Exchange on Wednesday afternoon. ($1=$1.01 Canadian) (Reporting by Cameron French and Susan Taylor; editing by Rob Wilson)

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