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Cameco Beats Analysts’ Estimates as Uranium Sales Rise

May 1 (Bloomberg) -- Cameco Corp., the world’s largest uranium producer, reported first-quarter profit rose 45 percent, beating analysts’ estimates as sales of the nuclear-reactor fuel climbed.

Net income increased to C$132 million ($134 million), or 33 cents a share, from C$91 million, or 23 cents, a year earlier, the Saskatoon, Saskatchewan-based company said today in a statement. Excluding a loss from contracts used to lock in commodity prices, per-share profit was 31 cents, topping the 25-cent average of 10 estimates compiled by Bloomberg.

Uranium sales rose 33 percent to 8.1 million pounds, higher than the 6.6 million-pound estimate of Edward Sterck, a London-based analyst at Bank of Montreal. Cameco estimates 96 nuclear reactors will be built in the next decade, boosting global uranium use by an average of about 3 percent annually.

“Our full-year expectations for uranium sales volumes have been biased toward the end of the year,” Sterck said in an interview before the results were released. “Higher-than-expected sales could indicate the company sold more into the spot market.”

Cameco rose 2.8 percent to C$22.47 at the close in Toronto. The shares have gained 23 percent this year.

First-quarter revenue increased 22 percent to C$563 million from C$461 million. The average cost of Cameco’s uranium sales fell to C$31.97 a pound from C$32.21.

‘Uncertainty Remains’

Higher sales volumes may help offset lower prices following last year’s tsunami and meltdown at Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear power plant. Cameco sold uranium for an average of $48.77 a pound in the first quarter, up from $48.06 a year earlier. Still, uranium futures have dropped 23 percent on the New York Mercantile Exchange since the March 11 earthquake that trigged the Japanese disaster.

Cameco expects to book about $30 million of costs in the second quarter from the cancellation of a sales contract with a customer. The cancellation is related to “events” following the Japanese disaster, the company said.

“Uncertainty remains in the market in the near to medium term as a result of the events in Japan,” Cameco said. “Nevertheless, we continue to see a strong and promising growth profile for the nuclear industry in the long term.”

While uranium prices will probably be little changed this year, they may be more volatile in 2013 with the expected expiry a U.S.-Russia agreement to market uranium from scrapped Russian nuclear warheads, Cameco Chief Executive Officer Tim Gitzel said today in a telephone interview.

“We see utilities fairly well covered for the year 2012 -- I don’t expect any dramatic swings in the price,” Gitzel said. “Next year will probably be more interesting.”

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

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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