Falconbridge posts quarterly profit

Newly listed Falconbridge (TSE) has reported a profit of $2 million for the second quarter — its first results since a $1.3-billion public offering about a month ago.

The company is attempting to slash a $1.8-billion debt with a share issue that also cuts the interests of joint owners Noranda (TSE) and Trelleborg AB of Sweden (46% and 28%, respectively).

On revenue of $449.6 million, Falco posted a profit of 2 cents a share for the three months ended June 30 (after applying proceeds from the sale of 174 million common shares). Included were deferred exchange losses of $33.3 million associated with debt repayments of $1.1 billion.

A year earlier, the company reported losses of 2 cents a share ($2.4 million) on revenue of $360.7 million.

“Our improved earnings reflect generally higher sales volumes and better prices for our copper, nickel, cobalt and silver products,” says Frank Pickard, Falco’s president and chief executive officer.

Average nickel output for the period was US$2.73 per lb., up slightly from US$2.71 a year earlier. Also, the price of copper rose to US98 cents per lb. from US87 cents between the two periods.

Proceeds from the initial public offering and exchange losses on debt repayments for the six months ended June 30 affected Falconbridge’s results when the company posted a loss of $5.6 million (5 cents a share) on revenue of $870.4 million.

At the company’s Ontario operations, manpower reductions and startup costs affected the 6-month results by a $21-million after tax charge — a notable improvement from year-earlier losses of $25.7 million (26 cents a share) on revenue of $715.5 million.

Falco says its recent public offering will result in net proceeds of $71.2 million cash.