Nov. 2 (Bloomberg) -- Cameco Corp., the world’s second- largest uranium producer, reported third-quarter profit that trailed analysts’ estimates because of lower prices and sales volumes of the raw material used in nuclear fuel.

Profit excluding one-time items was C$104 million ($96.8 million), or 26 cents a share, Saskatoon, Saskatchewan- based Cameco said today in a statement. That trailed the 33-cent average estimate of 14 analysts surveyed by Bloomberg.

Chief Executive Officer Jerry Grandey has stepped up purchases of uranium for trading purposes this year, boosting Cameco’s costs. The company’s sales of uranium fell 15 percent from a year earlier while its average realized price declined 9.6 percent.

“The main reason for the disappointment comes from the uranium business,” Greg Barnes, a Toronto-based analyst at TD Newcrest, said today in a note to clients. “A lower than expected uranium price was responsible for two-thirds of the miss, while lower-than-expected sales volumes were responsible for the remainder of the miss.”

Cameco fell 32 cents, or 1.1 percent, to C$29.84 at 4:15 p.m. in Toronto Stock Exchange trading. The shares have risen 42 percent this year.

Sales of uranium fell to 8.3 million pounds from 9.8 million a year earlier, the company said in the statement. Cameco sold uranium at an average price of $34.24 a pound in the third quarter, down from $37.88 a year earlier, and less than the $38.33 expected by Barnes.

Higher Costs

“The unit cost of product and services sold for the third quarter continued to be negatively affected by recent purchases at near market prices,” Cameco said.

Net income rose to C$172 million, or 44 cents a share, from C$135 million, or 39 cents, a year earlier, Cameco said in the statement. Sales fell 4.8 percent to C$694 million, less than the C$710.8 million expected on average by five analysts in the Bloomberg survey.

Cameco also is involved in nuclear fuel processing, nuclear power generation and holds a controlling stake in Centerra Gold Inc. of Toronto that it said it plans to sell.

London-based Rio Tinto Group was the world’s largest uranium producer by 2008 production, the World Nuclear Association said on its Web site.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

Last Updated: November 2, 2009 16:55 EST