TORONTO (CP) -- Cameco Corp. [TSX:CCO; NYSE:CCJ] is splitting its stock and enriching its dividend amid record financial results and what its CEO describes as ''optimism surrounding nuclear power in general.''
Jerry Grandey, commenting on ''another successful quarter'' ending Cameco's best-ever year for revenue and cash flow, told an investor conference call Wednesday that ''market fundamentals remain strong'' for the world's largest uranium producer.
In particular, after President George W. Bush's state of the union speech on Tuesday night, ''nuclear is foremost on the energy agenda of the United States.''
But Cameco's results will continue to be held back by the strong Canadian dollar and by long-term contracts signed in previous years when the price of uranium was much lower than it is now, executives said on the call. And growth in demand is constrained by the long lead times to build new nuclear reactors.
Cameco's fourth-quarter earnings were C$81 million or 44 cents a share, up by 119% from a year-ago profit of C$37 million, 21 cents per share, as revenue rose 45% to C$522 million from C$361 million.
Saskatoon-based Cameco also announced late Tuesday it is splitting its stock two-for-one. The shares, previously split three for one in December 2004, have more than doubled since then from C$40 to Wednesday afternoon's level of C$86.00, off C$3.79 on the day, after hitting a record C$91.85 on Monday.
The dividend rises to 32 cents per share on an annual basis (16 cents after the split) from 24 cents.
Grandey said current annual world uranium production is about 110 million pounds while demand is 175 million pounds, with the difference coming from inventory - weapon dismantling, civilian stockpiles and a minor amount of recycling.
''This industry over the next number of years, as those inventories are used up, is going to have to make significant investment in new mines,'' he told the conference call, speaking from New York where he was attending industry meetings.
Cameco's current Cigar Lake project in northern Saskatchewan ''is absolutely essential'' to even meet current consumption, let alone ''a scenario of nuclear renaissance which ought to be here, the way it looks, around the beginning of the next decade'' as new reactors are built.
''As time goes on, the level of interest in nuclear seems to be accelerating,'' Grandey said.
''We have Ontario now studying maintaining and probably growing the percentage of nuclear contribution to its electricity supply. The U.K. is now engaged in that debate. Countries that were talking about phaseouts are now quietly backing away and in some cases talking about building again.''
Meanwhile, China, India and others look to nuclear energy to power their economic development as ''you see increasing evidence that the world is once again turning to the technology.''
For all of 2005, Cameco's revenues increased 25% to C$1.31 billion from C$1.05 billion. But net earnings declined to C$218 million, C$1.21 per share, from C$279 million, C$1.56 per share, as a result of a C$62-million annual loss on restructuring at the Bruce Power Limited Partnership nuclear operation in Ontario.
The latest quarter's earnings were C$74 million, 40 cents per share, adjusted for one-time items including a loss on the shuffle of Bruce Power assets.
Analysts were on average expecting 52 cents per share, Merrill Lynch observed in a note.
''Earnings were lighter than expected due mainly to weaker profitability in the uranium conversion and power businesses, as well as higher administration and exploration costs, partially offset by stronger uranium profits,'' it commented.
Cameco, which also holds a majority interest in Centerra Gold Inc. [TSX:CG], said it has completed the C$108-million acquisition of Zircatec Precision Industries Inc., which makes nuclear fuel bundles for Candu reactors.
With the Zircatec takeover, announced in December, Cameco ''now covers all phases of the Canadian industry from uranium mining through to electricity generation,'' Grandey said.
Cameco ended 2005 with C$623.2 million in cash but has no immediate plans for further takeovers although it is ''looking for opportunities,'' he said.
Regarding Centerra, which is active in Kyrgyzstan, ''we're quite delighted with how Centerra has performed'' since it was spun off by Cameco a year and a half ago, Grandey said.
At that time the spinoff was seen as a way for Cameco to leave the gold industry and concentrate on uranium, but ''there's no need to dispose of Centerra,'' Grandey said.
''At a time we identify an opportunity in the nuclear arena, then obviously we'll pursue the path of beginning to exit our ownership in the gold business, but there's no timetable.''
Centerra shares, issued at C$15.50 in June 2004, traded Wednesday at C$41.20, making Cameco's 52.7% interest worth about C$1.5 billion.
(c) The Canadian Press 2006
