The Paducah Sun
The Paducah Sun
Thursday, October 26, 2000
Paducah, Kentucky

Earnings report bears out USEC's predictions

By Joe Walker
Quarterly earnings for Paducah Gaseous Diffusion Plant operator USEC Inc. dropped $11.5 million from the same period last year, affirming the financially troubled firm's earlier predictions.

USEC earned $4.6 million, or 6 cents per share, during the quarter ending Sept. 30. That compares with $16.1 million, or 16 cents per share, last year.

USEC said it still expects net income for the fiscal year to be $30 million to $35 million, reflecting lower anticipated revenue. Factors include much lower sales volume because USEC will not pursue low-margin spot sales; aggressive pricing by European competitors; and lower prices billed to customers.

The first quarter accounted for 14 percent of the year's projected net income, similar to last year. As usual, USEC expects the second quarter to be the best quarter with about 40 percent of yearly income.

The company sold $17.8 million more enriched uranium in the quarter with sales totaling $223 million, compared with $205.2 million in 1999. USEC said that was because of higher volumes driven by the timing of orders from nuclear utility customers specifically sales for an initial reactor core load offset by lower prices billed.

But USEC's other revenue source, the sale of natural uranium stockpiles, dropped from $25.7 million to $3.8 million during the comparative periods. Prices were relatively flat while quantities were lower.

Last fiscal year, USEC sold $101.6 million in natural uranium and it anticipates similar sales this year. The company said the short-term spot market for new natural uranium sales is soft and it is focusing on longer-term sales with higher prices.

Sale costs were 6 percent higher than last year because of increased sales and higher unit costs. USEC said costs are higher because of decreased production at its enrichment plants here and in Piketon, Ohio, and increased purchases of enriched uranium from dismantled Russian nuclear warheads.

USEC has come under heavy criticism for pricing its new contracts for enriched uranium too low while buying overpriced Russian uranium. Another complaint is its sale of natural uranium, which some say is forcing prices down in an already glutted market and threatening the future of the Honeywell plant in Metropolis, Ill. Honeywell is the nation's only plant that converts natural uranium to uranium hexafluoride, a raw product of the Paducah plant.

During the quarter, USEC reached the 20 million share mark in its stock repurchase program, in which USEC is authorized to buy back as many as 30 million shares through June.