July 30, 2008 / 12:45 PM / 9 years ago

UPDATE 1-Sherritt profit drops on weaker metals performance

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OTTAWA, July 30 (Reuters) - Sherritt International Corp’s (S.TO) profit fell 39 percent in the second quarter, the diversified Canadian miner and energy company said on Wednesday, as weaker nickel prices and lower finished metals production more than offset record oil prices.

Sherritt said it earned C$80.3 million ($78.7 million), or 28 Canadian cents a share, in the period ended June 30. That compares with a profit of C$132.4 million, or 72 Canadian cents per share, in the same period last year, when it had a smaller share count.

Analysts expected a profit of 34 Canadian cents a share, before items according to Reuters Estimates.

The Toronto-based company, which has power, oil, metal and hotel investments in Canada, Cuba and Madagascar, said revenue grew nearly 9 percent to C$441.2 million.

Finished nickel production fell 8 percent to 7,408 tonnes as the Fort Saskatchewan refinery closed for annual maintenance. Sherritt’s realized price for the metal plunged 48 percent to $12.12 a pound.

The maintenance shutdown saw cobalt production fall 10 percent to 812 tonnes as realized prices gained 51 percent to $45.67 a pound.

Sherritt said oil and gas revenue increased to C$104.5 million from C$77.7 million.

Coal revenue increased 18 percent to C$173.4 million.

The company has said it expects a cost run-up at the $3.3 billion Ambatovy nickel project in Madagascar due to higher prices and will announce a new cost estimate in early 2009.

Sherritt has budgeted C$1.6 billion in 2008 capital expenditures on the project, of which it is 40 percent owner and operator. At full production, seen in 2010, Ambatovy is expected to yield 60,000 tonnes of nickel and 5,600 tonnes of cobalt annually. ($1=$1.02 Canadian) (Reporting by Susan Taylor; editing by Janet Guttsman)

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