Noranda posts large loss

Excess worldwide production capacity and lower prices for its resource products forced Noranda (TSE) to report a loss of $133 million ($1.04 a share) in 1991, compared with earnings of $120 million in 1990.

The Toronto-based resource giant, which declared a $108-million writedown in 1991 fiscal results, was especially hard hit by losses of $75 million within its forest products division.

But earnings in Noranda’s mining and metals group also declined by 78% to $66 million in 1991 from $301 million in the previous year due to lower prices for copper, zinc, nickel and aluminum. President David Kerr said the division was also adversely affected by a 9-month strike at Noranda’s 67% owned Brunswick Mining and Smelting (TSE) zinc-lead mine near Bathurst, N.B. In the three months ended Dec. 31, 1991, Noranda reported a loss of $109 million or 67 cents a share following an $83-million writedown, compared with a loss of $13 million or 15 cents a share in the corresponding period last year.

After taking a $38-million writedown on its share of losses reported by Hemlo Gold (TSE), Noranda’s mining group lost $15 million in the fourth quarter, compared to earnings of $45 million in the final quarter of 1990. Included in the quarterly writedown was about $22 million associated with reclamation and severance payments.

The good news for Noranda was that lower interest rates in 1991 enabled it to reduce gross interest expenses on $4.5 billion in long-term debt to $450 million from $493 million in 1990.

While Noranda isn’t anticipating much improvement in the economy during the first half of this year, it expects lower interest rates and a weaker Canadian dollar to boost financial results by the end of 1992. “This should set the stage for a reasonable recovery in 1993,” the company said. A common dividend of 25 cents per share has been declared payable March 13 to shareholders of record, Feb. 28, 1992. A price of $18.97 has been set for those electing to receive their dividends in stock.