Sherritt reports sharp drop in Q2 earnings on lower nickel prices
By The Canadian Press | July 25, 2012
TORONTO - Sherritt International Corp. (TSX:S) is reporting a sharp drop
in second quarter net earnings on lower nickel prices and lower export
thermal coal sales volumes.
Net earnings were $40.8 million, or 14 cents per basic share, compared
to $60.1 million, or 20 cents per share, in the same year-earlier period.
Revenue for the second quarter of 2012 was $487.9 million compared to
$500.6 million year-over-year.
The Toronto-based miner, which has operations in Cuba, says net earnings
were also affected by higher depreciation, primarily resulting from
higher plant, property and equipment balances, and higher net finance
expense, partly offset by lower income tax expense.
Sherritt says net finance expense increased largely due to the interest
and accretion on the higher relative loans and borrowing balances.
Operating cash flow for second-quarter 2012 was $27.8 million, compared
to $48.5 million year-over-year.
Sherritt produces nickel from projects and operations in Canada, Cuba,
Indonesia and Madagascar, an island off the east coast of Africa.
The company is also the largest producer of thermal coal in Canada and
the largest independent energy producer in Cuba, with extensive oil and
power operations across the island.
David Pathe, who was Sherritt's chief financial officer, took over as
chief executive of the company on Jan. 1. He replaced long-time chief
executive Ian Delaney.
Last year, Sherritt extended its work schedule and increased estimated
costs for its Ambatovy project in Madagascar. It cited a litany of
problems including poor performance by contractors and inaccurate
estimates on the project in the island country off the east coast of Africa.
The company has said the capital cost of the project will come in at
US$5.5 billion, about 16 per cent more than it had previously predicted.
Sherritt, which has more than 6,800 employees, also licenses its nickel
mining technology to other metals companies.