Cameco Reports Third Quarter Earnings

Monday, November 02, 2009 8:25 AM

SASKATOON, SASKATCHEWAN, Nov. 2, 2009 (Marketwire) -- Cameco Corporation (TSX:CCO) (NYSE:CCJ) today reported third quarter 2009 net earnings of $172 million ($0.44 per share diluted), $37 million higher than net earnings of $135 million ($0.39 per share diluted) recorded in the third quarter of 2008. For the nine months ended September 30, 2009, net earnings were $501 million ($1.29 per share diluted), $82 million higher than net earnings of $419 million ($1.21 per share diluted) recorded in the first nine months of 2008.

Third quarter 2009 adjusted net earnings(1) of $104 million ($0.26 per share adjusted and diluted) were 18% lower than in the third quarter of 2008. Adjusted net earnings(1) for the first nine months of 2009 were $334 million ($0.86 per share adjusted and diluted), 19% lower than in 2008 due to lower earnings in the uranium and gold businesses, partially offset by higher results in the fuel services and electricity businesses.

"Cameco remains on target for another strong year in revenue and cash flow," said Cameco president and CEO Jerry Grandey. "Our focus on performance has given Cameco the capacity to respond to the positive long-term fundamentals we see in our business -- supplying uranium fuel to an energy-hungry world where nuclear is increasingly seen as the leading, credible option for clean energy generation."

In our uranium business, third quarter profits were in line with our quarterly delivery expectations communicated in last quarter's MD&A. Profits for both the third quarter and the first nine months of 2009 continue to be adversely affected by the higher unit cost of product and services sold. Consistent with prior disclosure, our unit cost of product and services sold is still expected to be 20% to 25% higher when compared to 2008. The expected cost of produced material remains unchanged from the last two quarterly reports. The increase in the unit cost of product and services sold is largely attributable to uranium purchases at prices substantially higher than our costs of production to support our sales activities, including higher trading volumes.

Our gold business was impacted by lower gold production and higher operating costs during the quarter and for the first nine months of the year.

In our electricity business, an increase in the realized price led to stronger results in the quarter and for the first nine months of the year. The increase was due largely to revenue recognized by BPLP under its agreement with the Ontario Power Authority (OPA). In addition, an increase in generation contributed to the improved results for the first nine months.

Results in our fuel services business were positively impacted by lower operating costs during the quarter and for the first nine months of the year. In addition, higher revenues in the first nine months of the year as a result of an increase in the average realized price for fuel services products contributed to the stronger yearly results.

Note: All dollar amounts are expressed in Canadian dollars unless otherwise stated. Cameco's unaudited third quarter financial statements and management's discussion and analysis are available on our company's website cameco.com, on SEDAR at sedar.com and on EDGAR at sec.gov/edgar.shtml.

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Three months ended Nine months ended Yr/Yr
Financial Highlights September 30 September 30 Change
------------------- ----------------- -------
2009 2008 2009 2008 %
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Revenue ($ millions) 694 729 2,083 1,941 7
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Net earnings ($ millions) 172 135 501 419 20
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Earnings per share (EPS) -
basic ($) 0.44 0.39 1.30 1.22 7
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EPS - diluted ($) 0.44 0.39 1.29 1.21 7
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Adjusted net earnings
($ millions)(1) 104 127 334 414 (19)
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EPS - adjusted and diluted
($)(1) 0.26 0.37 0.86 1.19 (28)
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Weighted average common
shares outstanding (millions) 393 346 386 345 12
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Cash provided by operations(2)
($ millions) 248 109 565 368 54
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(1) Net earnings for the quarters and nine months ended September 30, 2008
and 2009 have been adjusted to exclude a number of items. Adjusted net
earnings is a non-GAAP measure. For a description see "Use of Non-GAAP
Financial Measures" on page 9.
(2) Including changes in working capital. For more information on working
capital changes, refer to note 13 of the third quarter unaudited
consolidated financial statements.

Cameco's results come from four business segments:

URANIUM

Highlights
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Three months ended Nine months ended
September 30 September 30
----------------------------------------
2009 2008 2009 2008
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Revenue ($ millions)(1) 329 396 1,108 1,062
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Gross profit ($ millions) 69 120 356 473
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Gross profit % 21 30 32 44
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Average realized price
($US/lb) 34.24 37.88 37.26 42.69
($Cdn/lb) 39.18 39.90 45.80 44.42
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Sales volume (million lbs)(1) 8.3 9.8 23.9 23.6
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Production volume (million lbs) 5.6 2.8 14.1 11.8
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(1) Revenue in the amount of $85 million on 2.6 million pounds previously
deferred due to a standby product loan was recognized in the first
quarter of 2008 as a result of the cancellation of a product loan
agreement.

Uranium Results

For the third quarter of 2009, revenue from our uranium business was lower by $67 million at $329 million due to a 15% decrease in reported sales volumes and a 2% decrease in the realized selling price (in Canadian dollars). The decrease in the average realized price was related to lower realized prices under market-related and fixed-price contracts. A more favourable foreign exchange rate partially mitigated the Canadian dollar decline.

The timing of deliveries of uranium products within a calendar year is at the discretion of customers. Therefore, our quarterly delivery patterns can vary significantly.

Our total cost of products and services sold, including depreciation, depletion and reclamation (DD&R), decreased to $260 million in the third quarter of 2009 from $275 million in the third quarter of 2008 due to the 15% decrease in sales volume, partially offset by a 12% increase in the unit cost of product and services sold. The unit cost of product and services sold for the third quarter continued to be negatively impacted by recent purchases at near market prices.

For the first nine months of 2009, revenue from our uranium business increased by $46 million to $1,108 million due to a 3% increase in the realized selling price (in Canadian dollars) and a 1% increase in reported sales volumes.

Our total cost of products and services sold, including DD&R, increased to $752 million in the first nine months of 2009 from $589 million in 2008 due primarily to a 26% increase in the unit cost of product and services sold. The unit cost of product and services sold was negatively impacted by the carryover effect of lower production in 2008, recent purchases at near market prices, higher royalties and increased input costs.

Uranium Production
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Three months ended Nine months ended
Cameco's share of September 30 September 30
production (million --------------------------------------- 2009 planned
lbs U3O8) 2009 2008 2009 2008 production(1)
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McArthur River/Key Lake 3.8 2.1 9.3 8.5 13.1
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Rabbit Lake 0.9 0.2 2.4 1.7 3.6
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Smith Ranch/Highland 0.4 0.3 1.3 1.0 1.8
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Crow Butte 0.2 0.1 0.6 0.4 0.8
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Inkai 0.3 0.1 0.5 0.2 0.9
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Total 5.6 2.8 14.1 11.8 20.2
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(1) See the section titled "Uranium Production Outlook (2009 to 2013)" in
our third quarter MD&A for more information about the assumptions and
risk factors associated with this production forecast.

FUEL SERVICES

(1) Kilograms of uranium (kgU).
(2) Production volume includes UF6, UO2, fuel fabrication, and UF6 supply
from Springfields Fuels Ltd.

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