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Monthly Archives: August 2011

CCJ reports slowed earnings, not from Fukushima

Cameco has reported earnings and did a breakdown of their anticipation of the uranium market.

I’ll just post this first, as it’s what likely interests everyone the most.

Uranium market update

It has been almost five months since the Fukushima-Daiichi nuclear power plant was damaged by the devastating earthquake and tsunami in Japan. As Japan continues to manage the effects of these events on its nuclear reactor fleet, the future role of nuclear energy in that country is also being discussed. While there are reports of strong support for nuclear from various industry groups in Japan, public sentiment is reportedly more cautious.

Other countries around the world have now had time to do a preliminary review of their nuclear programs. With very few exceptions, we see these countries continuing their commitment to nuclear energy. India, China, France, Russia, South Korea, the United Kingdom, Canada, the United States, and almost every other country with a nuclear program are maintaining nuclear as a part of their energy mix.

There are a few exceptions, Germany being the most notable. Germany, which has 17 nuclear reactors, representing 5% of the global generating capacity, has decided to revert to its previous phase out policy. Currently, eight of its reactors (about 2% of global generating capacity) are shutdown; we do not expect these reactors to restart. Germany has indicated it plans to shut down the remaining nine reactors by 2022.

Despite these changes, the nuclear industry is growing. Other previously non-nuclear countries are considering adding nuclear to their energy programs in the future. Saudi Arabia, for example, recently announced its plan to build 16 reactors by 2030. Its plan includes building the first two reactors over the next 10 years and adding two new reactors every year thereafter. The Saudis are targeting nuclear power to provide 20% of their electricity needs in the future. Saudi Arabia has signed nuclear co-operation agreements with France and Argentina, and has announced plans to sign agreements with China and South Korea in the near future. We have not incorporated this announcement from Saudi Arabia into our supply and demand outlook below.

We have reviewed our supply and demand outlook from the first quarter and revised our estimates to reflect Germany’s decision to move away from nuclear and the current status of Japan’s nuclear fleet. As a result, we expect:

— over the next 10 years, world uranium demand to decline to about 2.1
billion pounds, compared to our previous estimate of 2.2 billion pounds
(about a 3% decline)
— in 2020, annual world consumption to decrease to about 225 million
pounds, about a 5 million pound reduction from our previous estimate.
This represents an average annual growth rate of about 3%.
— about 85 net new reactors by 2020 compared to our previous estimate of
about 90
— global uranium consumption in 2011 to decrease to about 175 million
pounds, a 3% reduction from our previous estimate of about 180 million
— global uranium production to be about 145 million pounds in 2011,
unchanged from our previous estimate
— world consumption of UF6 and UO2 conversion services to decrease to
about 65 million kgU in 2011 compared to our previous estimate of about
70 million kgU

Despite the expected decreases in our estimates noted above, we continue to expect annual global consumption to exceed annual global mine production by a significant margin over the next 10 years, a situation that has existed since about 1986. We expect the new supply required to meet global uranium demand to be about 270 million pounds over the next 10 years (our previous estimate was 320 million pounds).

About 70% of global uranium supply over the next 10 years is expected to come from mines currently in commercial operation, less than 20% is expected to come from existing secondary supply sources and the remainder is expected to come from new sources of supply (unchanged from our previous estimate).

With our extensive portfolio of long-term sales contracts, we are in the enviable position of being heavily committed until 2016. As a result, we expect the impact of changes in the global supply and demand outlook on us to be significantly less.

Despite this, the president/CEO went on to say that the slowdown in his company was not likely do to the uranium market, so much as cyclical factors; he believes the company will continue to perform within guidance.


Cameco (TSX: CCO – News) (NYSE: CCJ – News) today reported its consolidated financial and operating results for the second quarter ended June 30, 2011 in accordance with International Financial Reporting Standards (IFRS).

“Through the second quarter of 2011 our operations demonstrated reliable production, keeping us on track for the year. At Cigar Lake, we continue to make significant progress,” said president and CEO Tim Gitzel. “We also made changes to Cameco’s management team to ensure we have the right mix of experience and energy to execute on our strategy to double annual uranium production by 2018.

“As we anticipated, this quarter’s financial results were lower due to variability in the timing of uranium deliveries. We expect our sales will be heavily weighted to the second half of the year and anticipate stronger results in the third and fourth quarters.

“With our extensive portfolio of long-term sales contracts, we are in the enviable position of being heavily committed until 2016, which provides us with financial stability as we pursue our corporate growth strategy.

“Over the longer term, we remain confident in the strong fundamentals of the uranium market. World demand for safe, clean, reliable, affordable energy continues to grow and the need for nuclear as part of the world’s energy mix remains as compelling as ever.”

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AWK reports solid earnings

VOORHEES, N.J.–(BUSINESS WIRE)– American Water Works Company, Inc. (NYSE:AWK – News), the largest publicly traded U.S. water and wastewater utility company, today reported results for the second quarter ended June 30, 2011. For the quarter, the company earned net income of $84.6 million and earnings per share of $0.48. Included in net income and earnings per share are $3.2 million and $0.02, respectively, related to the cessation of depreciation on assets under agreement for sale or sold in Arizona, New Mexico and Texas, classified as discontinued operations. Including the effect of depreciation expense related to these assets, adjusted net income for the second quarter 2011 was $81.4 million and adjusted earnings per share was $0.46 (non-GAAP financial measures). This is a more than 9.5 percent increase over the net income of $72.8 million and $0.42 per share in the comparable period in 2010.

“American Water’s continued execution of its strategies has resulted in another solid quarter,” said Jeff Sterba, president and CEO of American Water. “We increased revenues, net income and earnings per share. In addition, we are expanding our business in key states while improving our operating efficiency ratio. By driving operational excellence, we benefit our customers by providing reliable service at about a penny per gallon and investing needed dollars to maintain our pipes and plants.”

During the quarter, the company’s revenues increased 6.2 percent or $39.3 million quarter-over-quarter to $674.2 million. Operating expenses for the three months ended June 30, 2011, totaled $473.1 million, an increase of $26.5 million, or 5.9 percent, compared to the same period in 2010. Net cash provided by operating activities for the six months ended June 30, 2011, was $262.4 million compared to $297.5 million for the six months ended June 30, 2010. The decrease in cash flows was primarily driven by additional pension contributions and the receipt of a tax refund in the first half of 2010 that did not reoccur in 2011. The company’s capital expenditures for the six months ended June 30, 2011, were $391.8 million compared to $327.3 million for the same period in the prior year.

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Upgrades and Downgrades This Morning


TIF – Tiffany & Co upgraded to Neutral from Sell at Goldman

EMN – Eastman Chem initiated with an Outperform at Wells Fargo

MCD – McDonald’s upgraded to Overweight from Neutral at Piper Jaffray

EMC – EMC upgraded to Buy at Collins Stewart

WXS – Wright Express upgraded to Outperform at Morgan Keegan

SGY – Stone Energy added to Focus List at Howard Weil

LAZ – Lazard upgraded to Buy from Hold at Citigroup

FTR – Frontier Communications upgrade to Outperform from Mkt Perform at Raymond James

AZN – AstraZeneca upgraded to Hold from Underperform at Jefferies

S – Sprint Nextel upgraded to Hold at Stifel Nicolaus

BID – Sotheby’s upgraded to Buy from Hold at Craig Hallum


AGN – Allergan downgraded to Neutral from Overweight at Piper Jaffray

WFR – MEMC Elec downgraded to Hold at Kaufman Bros

EE – El Paso Electric downgraded to Neutral at Ticonderoga

WLT – Walter Energy downgraded to Hold from Buy at Keybanc

OSG – Overseas Shipholding downgraded to Sell from Neutral at Sterne Agee

CF – CF Industries upgraded to Neutral from Sell at Goldman

BKI – Buckeye Tech upgraded to Buy from Neutral at UBS

DVA – DaVita upgraded to Outperform from Mkt Perform at Raymond James

RDC – Rowan Cos downgraded to Outperform from Strong Buy at Raymond James

DNDN – Dendreon downgraded to Neutral from Outperform at Cowen

HRL – Hormel Foods downgraded to Sell from Neutral at Goldman

CSC – Computer Sciences target lowered to $45 from $50 at Stifel Nicolaus

CLX – Clorox downgraded to Below Average at Caris

HMA – Health Management downgraded to Fair Value from Buy at CRT Capital

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Gapping up and Down This Morning

Gapping up

WWWW +24.7%, , THOR +5.2%, KS +5%, ATVI+4.9%, UN +4%, HOTT +2%, SNTS+2%, WFR +1.9%, ASGN +14.9%, DVA +3.9%, ANDE +7.2%, NQ +5.7%, SLI+5.4%, SOLR +5.3%, KFT +3.5%, TSO+3%, HIT +2%, SWI +9.9%, ZIP +9.1%, FIRE +8.5%,

Gapping down

DNDN -61.5%, HBC -2.4%, E -2.1%, DB -3.6%, ONNN -4.3%, YOKU -4.1%, MDR -1.9%, CS -1.8%UBS -3.6%, TSLA -3.5%,RDS.A -2.8%, NTSP -8.7%, MT -6.3%, BCS -6.1%, RIO -5.9%,STO -2.8%, LEAP -5.9%, SDRL -5.7%, WLT -5%, BBL -4.9%, BHP -4.6%, CBOU -3.1%, TOT -2.1%, ENTR -25.1%, CLWR -2%, MELI -4.4%,, BP -1.1%, SCOR -14.6%, ZUMZ -13.3%, VE -12.2%, CECO -10.8%, FRO -9.6%, RIG -9.3%, LOCM -8.7%,

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Currency Intervention in The Franc and the Yen is Also Killing Profits

The Swiss France has risen 42% since 2008. Exports accounts for half of Switzerland’s GDP and with currency intervention companies are getting killed.

How long can this go on ? The Swiss has a current account surplus making it a well sought after safe haven for stressed money.

Full article

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Currency Analysts Feel a Potential War Has Been Started Given Recent Intervention in the Yen and Franc

A currency war may be under way as the YEN and Franc have been weakened by their respective governments to trade in better relation to the dollar. This in turn is causing tension in other economies where a so called currency devaluation truce had been declared.

Full article

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Spanish Bond Yields Approach the 7% Mark

The Spaniards held a bond auction where yields on the 10 year moved closer to 7%. The 10 year yield hit a record high before falling back. The auction went better than expected.

Full article

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