Weak prices hurt Noranda

Weak metals prices and production cutbacks took their toll on Noranda (TSE), which lost $37 million in 1993, compared with net earnings of $79 million in the previous year.

Earnings from mining and metals were down substantially, at $21 million, compared with $153 million in 1992.

Noranda’s overall loss for 1993 includes its share, on an after-tax basis, of a loss on the sale of MacMillan Bloedel ($30 million), an Atholville pulp mill closure provision ($55 million) and a gain on the sale of 12 million Noranda Forest shares ($46 million). The major says that, had it provided for these one-time losses, it would have been able to declare a profit of $3 million for the year.

“Markets for our products simply didn’t recover in 1993,” conceded President David Kerr.

“Prices of zinc, copper, aluminum, nickel and pulp all fell further during 1993 from the sub-normal levels of 1992 and resulted in a number of temporary production shutdowns. These factors were only partially offset by improved prices for building materials and natural gas, and continuing productivity improvements.”

The forest products group (excluding the Atholville closure provision) earned $48 million, compared with $21 million in 1992. This improvement is largely the result of solid wood prices, which more than offset poor pulp and newsprint prices and lower production.

The oil and gas group earned $47 million, down from $59 million in 1992 because of lower oil prices, higher depletion and writedowns (these were partially offset by higher natural gas prices).

Borrowing costs were down substantially in 1993, compared with 1992, as a result of lower interest rates and reduced debt. About 80% of Noranda’s debt remained at floating interest rates at the end of 1993.