UPDATE 2-Cameco profit falls, cuts uranium sales forecast

Fri Aug 13, 2010 9:18am EDT

* Q2 Adj EPS C$0.29 vs C$0.41 a year ago

* Q2 Revenue down 15 pct to C$546 mln

* Sees 2010 uranium rev down 10 to 15 pct from 2009 level (Adds details on results, forecast, byline)

By Euan Rocha

TORONTO, Aug 13 (Reuters) - Cameco Corp (CCO.TO) reported a weaker second-quarter operating profit on Friday, as results were hurt by lower uranium sales volumes and a lower realized uranium selling price.

The top Canadian uranium producer also lowered its 2010 uranium sales forecast to 30 million pounds from a range of 31 to 33 million pounds, as some customers deferred deliveries into 2011.

Cameco also said it expects 2010 uranium revenues to fall 10 percent to 15 percent below 2009 levels, compared with its prior forecast of a 5 to 10 percent decline.

Excluding one-time items, earnings fell to C$114 million, or 29 Canadian cents a share, in the quarter ended June 30. That compared with a year-before profit of C$162 million, or 41 Canadian cents a share.

Analysts polled by Thomson Reuters I/B/E/S had expected, on average, a profit of 24 Canadian cents a share.

The company said its net income fell 72 percent to C$68 million, or 17 Canadian cents a share, down from C$247 million, or 63 Canadian cents a share, a year earlier.

Net income in the latest quarter was hurt by an after-tax expense of C$46 million for unrealized mark-to-market losses on financial instruments, while the year-ago net income included a C$107 million one-time gain.

The company said lower revenues from its fuel services and electricity businesses also weighed on its bottom-line in the recent quarter.

Quarterly revenue fell 15 percent to C$546 million in the second quarter.

CIGAR LAKE

Cameco said it continues to expect that Cigar Lake will begin initial production in mid-2013.

The uranium mine was on track to produce 18 million pounds a year before it flooded in 2006. Cameco has been struggling to overhaul the project for the past four years.

"Cigar Lake is a key part of our plan to double annual uranium production to 40 million pounds by 2018, and we are committed to bringing this valuable asset safely into production," said the company, in a statement.

Cameco trimmed its 2010 capital expenditure forecast to about C$510 million from its previous estimate of C$552 million due to changes in the scheduling of certain projects.

The company said it does not expect this reduction in capital expenditures in 2010 will impact its plans to double annual uranium output by 2018. ($1.00= $1.04 Canadian) (Reporting by Euan Rocha and Julie Gordon, editing by Dave Zimmerman)

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