Inco forecasts record Q3 earnings
Buoyed by surging nickel prices, takeover target Inco said Wednesdayit's on track for record third-quarter earnings that will beat analysts' expectations.
Inco said it anticipates adjusted net earnings of $610 to $630 million US ($2.66 to $2.75 US per share), which is 44 per cent above the consensus of analysts who follow the company.
The nickel giant credits higher nickel and copper prices.It notes thatnickel has beenselling for an average of $13.18 US a pound in the third quarter, compared to $9.09 a pound in the second quarter.
Copper's gain has been less impressive, rising to $3.49 US a pound this quarter, compared to an average of $3.29 a pound in the previous three months.
Inco's rosy Q3 forecast came even asthe companylowered itsproduction estimates for both nickel and copper because of equipment breakdowns at its operations in Ontario, Manitoba and Indonesia.
"Inventories throughout the supply chain are at the lowest levels we have ever seen,"executive vice-president Peter Goudie saidin a news release.
"Our customers are looking for more nickel and we are doing all we can to supply them, but it is difficult to meet all demands," Goudiesaid. "This is creating, as expected, considerable volatility in prices as the market adapts to the new pricing levels."
Inco said the two-month strikeat its Voisey's Bay operations in Labrador is not expected to affectproduction of finished nickel or cobalt, as it has enough stocks of concentrate on hand.
But it said the strikehas affectedproduction of copper concentrate that's sold to European customers.
Brazil'sCVRD is poised to acquire Inco aftercompeting bids from U.S. miner Phelps Dodge and Canada's Teck Cominco both failed.
CVRD is offering $86 a share.
In Wednesday trading on the TSX, Inco shares closed at$85.30, down a penny.