The Saskatchewan-based company saw its profits drop from $143 million in the Q1 2010 to $91 million in Q1 2011. Additionally, the company's revenue dropped 6% from $485 million to $454 million.
Cameco attributes the financial decline to several factors including: lower earnings from its electricity and fuel services businesses due to lower prices and higher costs; and lower earnings from its uranium business due to lower sales and an increase in the average cost of the products it sells.
In the short-term, the company expects its uranium business to be slow as the nuclear industry pauses to learn from the Fukushima disaster. Nevertheless, Jerry Grandey, Cameco's CEO says the company's nuclear business has a strong future: "A number of countries have already reaffirmed that building new nuclear reactors is essential to meeting long-term energy demand in their rapidly developing economies."
He further added, "These nuclear building programs require additional global uranium supply. That's why our strategy to double annual uranium production by 2018 from our world-leading asset base is unshaken."
Cameco holds the controlling interest in the world's largest known reserves of high-grade uranium in Saskatchewan. Currently, the company produces 16% of the world's uranium from its operations in Canada, the United States, and Kazakhstan. Only AREVA supplies more uranium than Cameco.
The company is looking to expand its current mining facility in Kazakhstan, as well as develop projects in Australia. In November 2010, Cameco signed a long-term contract to supply China Guangdong Nuclear Power Holding Co., Ltd with 29 million pounds of uranium concentrate through 2025.
This contract could allow Cameco to grab a foothold in China's burgeoning nuclear industry. Reports indicate China plans to increase its nuclear capacity from the current 11 gigawatts to 80 gigawatts by 2020.
Image credit: Cameco
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