[cdn-nucl-l] Cameco Reports Sharply Higher First Quarter Earnings

["Adam McLean" <adam.mclean@utoronto.ca>]

Posted on the Cameco newslist on May 2, 2003 and at:
http://www.cameco.com/investor_relations/quarterly/2003-q1/2003-q1.pdf
Easier to read from the PDF above.  Incredible numbers from Bruce...

Adam

--------------------

Cameco Reports Sharply Higher First Quarter Earnings
Saskatoon, Saskatchewan, Canada, May 02, 2003

PDF (87 KB)

Cameco Corporation today reported its financial results for the three months
ended March 31, 2003. 

HIGHLIGHTS 

Acquired additional interest in Bruce Power. 
Higher electricity prices and output raise Bruce Power earnings. The B plant
reactors set a record achieving a 100% capacity factor. 
Water inflow interrupts McArthur River production for 4 to 6 months. 
Uranium and conversion revenues down on lower scheduled deliveries. 
Kumtor pit wall cleanup on track for July completion, gold prices higher. 
Financial Highlights  Three months
ended
March 31/03  Three months
ended
March 31/02  Change% 
Revenue ($ millions) 103 124 (17) 
Earnings from operations ($ millions) 9 11 (18) 
Cash provided by operations ($ millions) 56 134 (58) 
Net earnings attributable to common shares ($ millions)* 37 5 640 
Earnings per share ($) 0.66 0.09 633 
Average uranium spot price for the period ($US/lb U3O8) 10.13 9.79 3 
Cameco's average realized gold price for the period (US$/ounce) 318 284 12 
Average spot market gold price for the period (US$/ounce) 352 290 21 
*Includes $33 million after-tax contribution from Bruce Power. 

1. CONSOLIDATED FINANCIAL RESULTS 

First Quarter. For the three months ended March 31, 2003, net earnings
attributable to common shares increased to $37 million ($0.66 per share)
from $5 million ($0.09 per share) in 2002. This improvement was attributable
to increased earnings from Bruce Power where profits rose due to higher
realized electricity prices, increased output and higher percentage
ownership. Earnings from the uranium and conversion businesses rose modestly
due to higher prices. These improvements were partially offset by higher
costs for administration, interest and income taxes. Compared to the first
quarter of 2002, the effective tax rate increased to 34% from 18% due to the
higher earnings from Bruce Power. 

Earnings from operations were $9 million in the first quarter of 2003
compared to $11 million in 2002. The aggregate gross profit margin increased
to 26% from 18% in 2002. 

Cash flow from operating activities of $56 million was $78 million lower
than in the first three months of 2002. This is mainly due to lower revenues
in 2003 and the significant cash inflow from accounts receivable in the
first quarter of 2002. 

Segmented Financial Results 

Uranium Business Highlights Three months
ended
March 31/03 Three months
ended
March 31/02 
Revenue ($ millions) 55 72 
Gross profit ($ millions) 14 12 
Gross profit % 26 16 
EBT* ($ millions) 12 9 
Sales volume (lbs. thousands) 3,052 4,644 
Production volume (lbs. thousands) 5,637 3,596 
*Earnings before taxes.     


First Quarter. Revenue from the uranium business decreased by 24% to $55
million from $72 million in the first quarter of 2002 due to a 34% decrease
in sales volume. As the timing of deliveries of nuclear products within a
calendar year is at the discretion of customers, Cameco's quarterly delivery
patterns can vary significantly. A 16% increase in the average realized
selling price for uranium concentrates compared with the first quarter of
2002 partially offset the volume decrease. The higher realized price was
mainly the result of a change in the mix of contracts under which deliveries
were made in the first quarter. The uranium spot price averaged $10.13 (US)
in the first quarter compared to $9.79 (US) in 2002, an increase of 3%. 

The total cost of products and services sold, including depreciation,
depletion and reclamation (DDR) was $41 million in the first quarter of 2003
compared to $60 million in 2002. This decrease was attributable to the 34%
decline in sales volume for the quarter. 

Earnings before taxes from the uranium business increased by $3 million in
the first quarter of 2003 while the profit margin improved to 26% from 16%
in 2002. 

Conversion Business Highlights Three months
ended
March 31/03 Three months
ended
March 31/02 
Revenue ($ millions) 21 26 
Gross profit ($ millions) 7 6 
Gross profit % 35 22 
EBT ($ millions) 7 5 
Sales volume (tU) 2,128 3,191 
Production volume (tU) 3,856 3,511 


First Quarter. Revenue from the conversion business decreased by 21% to $21
million from $26 million in the first quarter of 2002 due mainly to a 33%
decrease in sales volume. As with uranium deliveries, quarterly delivery
patterns can also vary significantly. The decrease in volume was partially
offset by an 18% increase in the realized selling price, the result of
favourable pricing attached to first quarter deliveries. 

The total cost of products and services sold, including depreciation,
depletion and reclamation (DDR) was $13 million in the first quarter of 2003
compared to $20 million in 2002. This decrease was primarily attributable to
the lower sales volume for the quarter. The unit cost of products and
services sold rose by about 3% over the previous year due to increased
deliveries of purchased material. Unit DDR charges decreased for the same
reason. 

Earnings before taxes from the conversion business increased by $2 million
in the first quarter of 2003 while the profit margin increased to 35% from
22% a year earlier. 

Electricity Business 

Bruce Power Limited Partnership (100% basis) Highlights Three months
ended 
March 31/03 Three months
ended 
March 31/02 
Output (terawatt hours) 6.8 5.0 
Capacity factor (%) 100 74 
Realized price (per MWh) $57 $38 
($ millions)       
Revenue $398 $198 
Operating costs 194 194 
Earnings before interest and taxes 204 4 
Interest 16 15 
Earnings (loss) before taxes $188 $(11) 
Cameco's earnings from Bruce Power  $49 $(2) 
Note: Capacity factor for a given period represents the amount of
electricity actually produced for sale as a percentage of the amount of
electricity the plants are capable of producing for sale. 


In December 2002, Cameco signed an agreement along with others to
collectively purchase 79.8% of Bruce Power from British Energy plc. In
February 2003, the purchase closed and Cameco's limited partnership interest
in Bruce Power, held through subsidiaries, increased from 15% to 31.6%.
Cameco paid approximately $204 million for this additional interest. Also,
Cameco and others each advanced $75 million to Bruce Power which used these
funds to pay $225 million in deferred rent to Ontario Power Generation, Inc.
This investment is accounted for using the equity method. 

During the first three months of 2003, the performance of the Bruce B
reactors was exceptional, generating 6.8 terawatt hours of electricity
representing a capacity factor of 100%. There were no planned or unplanned
outages. This output represents a 36% increase over the first quarter of
2002. 

For the quarter, revenues increased to $398 million from $198 million in
2002. Along with higher generation, this increase was due to a higher
realized selling price which averaged $57/MWh from a mix of contract and
spot sales. During the quarter, the spot price averaged $76/MWh and was
influenced by the severe winter weather in Ontario. In 2002, the electricity
price was fixed at $38/MWh until the market opened on May 1, 2002. 

Although output was up 36%, operating costs remained the same on a
quarter-over-quarter basis illustrating the fixed cost nature of the
business and the impact of cost control initiatives. The operating unit cost
was $28/MWh compared with $39/MWh in the first quarter of 2002. 

For the quarter, Bruce Power earnings before taxes were $188 million
compared to a loss of $11 million in 2002. The increase in earnings is
attributable to the higher output and higher realized prices. 

For the three months ended March 31, 2003, Cameco's earnings from Bruce
Power amounted to $49 million compared to a loss of $2 million in 2002. For
2003, Cameco's share reflects its 15% interest through February 13 and its
31.6% interest thereafter. 
  
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Investor inquiries:
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Lyle Krahn (306) 956-6316