Shares of Sherritt International Corporation (TSX: T.S, Stock Forum) were down 13.5% to $2.24, as the company reported its fourth quarter results Wednesday morning, including a net loss of $592.1 million, or $2.03 per share, as a result of an impairment of the full amount of the goodwill of $463.3 million related to the Ambatovy Project in Madagascar.
The company’s Q4 net loss compares to fourth quarter 2007 net earnings of $83.5 million, or 36 cents per share, as it noted that fourth quarter 2008 results were “significantly impacted by the decline in the nickel, cobalt and oil markets.”
In 2008, Sherritt recorded a net loss of $289.7 million or $1.05 per share compared to 2007 net earnings of $370.4 million, or $1.79 per share.
The company also noted Wednesday that, based on current market conditions, it may not be in compliance with one of its financial covenants in the second quarter of 2009 applicable to certain short-term credit facilities that provide up to $200 million of total liquidity.
The company and its Ambatovy partners, Sumitomo Corporation, Korea Resources Corporation and SNC-Lavalin Inc., also announced an updated capital cost estimate of U.S.$4.52 billion for the development of the Ambatovy Project. Mechanical completion of the Ambatovy Project is anticipated by the fourth quarter of 2010.
Sherritt also notes that it finalized a payment agreement this month, with respect to $126 million in oil and gas receivables and $36 million in power receivables in Cuba that were overdue as of December 31.
Adjusted for these and several items, the fourth-quarter 2008 net loss was $20.8 million, or seven cents per share, and 2008 net earnings were $263.5 million, or 93 cents per share.
For 2009, Sherritt says under current uncertain market conditions, its results may continue to be impacted negatively by low nickel, cobalt and oil prices as well as lower thermal coal and potash prices. The company is expecting full-year production for 2009 of 33,500 tonnes of finished nickel and 3,500 tonnes of finished cobalt, 36 million tonnes of coal, and net oil and gas production of 16,000 bpd, effectively unchanged from 2008.
On the Bullboard Monday, kclbull offered some predictions for the quarter, saying: “predicting flat quarter with less oil revenue but less expenses. nickel project slowed so less expenses. quarter should still be better than expected and is def priced in. When the book values over $10 how can u go wrong. nickel bottoming...stock beat down approx 80%...strong balance sheet...large project to open in 2010-2012 now?...alot of upside here[sic]”
