The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Thursday, August 01, 2002

USEC blames delays on Russian uranium for drop in earnings

By Joe Walker

USEC Inc. blamed the Bush administration's slow approval of cheaper Russian uranium partly for a $64.2 million drop in earnings last fiscal year.

The operator of the 1,500-employee Paducah Gaseous Diffusion Plant reported net income Wednesday of $16.2 million, or 20 cents a share, during the fiscal year ending June 30. That compares with $78.4 million, or 97 cents per share, in 2001.

"Due to government delay in approving new pricing terms for USEC purchases of Russian enriched uranium, USEC's fiscal 2002 costs were substantially higher than originally anticipated," the firm said.

USEC said it expects to earn $9 million to $12 million this fiscal year. The continued drop is reflected in the roughly $150 million the firm will spend over the next five years to prepare to build a gas centrifuge plant at either Paducah or Piketon, Ohio, in the 2010-11 time frame. Centrifuge technology will eventually replace the outdated, power-costly process used at the Paducah plant.

Although USEC's revenue from selling enriched uranium rose $252 million, or 24 percent, from 2001 to 2002, its sale costs jumped $329 million, or 33 percent, resulting in a $47 million drop in gross profit. USEC gained $4.2 million after a special tax credit for closing the Piketon diffusion plant and consolidating work at Paducah.

Federal approval of the Russian deal in June will boost profitability during the remaining 12 years of the contract, USEC said. Mixing the cheaper material, derived from dismantled former Soviet nuclear warheads, with the Paducah plant's more expensive product helps hold down overall production costs, the company says.

USEC said enriched uranium sales rose despite a 3 percent drop in the average price billed to customers. The rise was mainly because of higher sales to domestic nuclear power plants based on timing and movement of reactor refueling orders, the company said.

USEC declared a quarterly dividend of 13.75 cents per share of common stock, payable Sept. 15 to shareholders of record Aug. 23.