Cameco Corporation (USA)(NYSE:CCJ) released its consolidated financial and operating report for the second quarter closed June 30, 2016. Net losses attributable to stock holders in the reported quarter amounted to $137 million against net earnings of $88 million in the second quarter of FY2015. It can be largely attributed to impairment of company’s Rabbit Lake operation, higher administration expenses, and lower gross profit from its NUKEM and uranium divisions and losses (mark-to-market) on foreign exchange derivatives against the reported gains in 2Q2015. The net losses were partially offset by improved foreign exchange gains.
Cameco reported that on an adjusted basis, the losses in reported quarter came at $57 million versus earnings of $46 million in the second quarter of FY2015. The change was primarily due to reduce gross profit from company’s NUKEM and uranium segments, and higher administration expenditures.
The management speaks
Tim Gitzel, the CEO and President of Cameco, said that the quarterly performance was impacted by a quiet market, and a number of one-time and notable items. However, the cost of sales projections and the yearly sales guidance remain unchanged. The long-term contract setup continues to support the average realized price with the management’s focus on controlling costs across the businesses. Gitzel further added that market conditions have turned ever more challenging in the past five years.
The primary supply has failed to respond to reduced demand, and together with a plenty of secondary material accessible in current scenario, the uranium industry remains to be oversupplied. Therefore, prices have stayed under pressure. As there is no clarity on for how long the prevailing weak conditions will continue, the management have to run the operations keeping that uncertainty in mind.
The CEO of Cameco added that despite the prevailing market challenges, they are confident in nuclear power as a vital part of the long standing universal energy mix. Following the ongoing process of reactor construction around the world, they continue to anticipate uranium demand to surge in the long-term.