Sunday, April 30, 2006

Cameco Corporation NYSE:CCJ TSE:CCO Q1 Results

Cameco posted net earnings for the first quarter of C$117.0 million or C$0.32 per share, up from C$26.0 million or C$0.07 per share in the same period of last year. Earnings from operations for the quarter grew to C$143 million from C$15.0 million in the corresponding period of previous year. The company attributed the rise in earnings to improved results in the uranium business.

Cameco reported first quarter revenue of C$542 million compared to C$216 million in the comparable period of prior year. Revenues from uranium were C$285 million, up from C$78 million, while from fuel services grew to C$44 million from C$26 million in the year-ago period.

Revenues from Bruce Power Limited Partnership fell to C$334 million from C$411 million, while from gold declined to C$107 million from C$113 million in the corresponding period of last year.

Looking ahead, the company expects second quarter-consolidated earnings to be lower than that of the first quarter. Further, Cameco sees fiscal year 2006 earnings to be marginally less than fiscal year 2005 earnings, while revenues to grow by 50% from last year.

Analysis: Cameco surprised me slightly with their stronger-than-expected Q1 performance but the lower guidance for Q2 should temper the enthusiasm. What was not surprising was the driver for Cameco's improvement, that being uranium. Although a large proportion are hedged, enough of Cameco's contracts could take advantage of the overall price increase of uranium oxide to raise the overall profit. Which of course, makes Urasia's (CVE:UUU) next quarterly report all the more important as a benchmark, as that company is fully unhedged. Still, Cameco, being the behemoth of the uranium industry, is expected to give all uranium juniors a spark with these earning results when the markets reopen tomorrow.


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