Reports on Inco AGM 2004
Published by MAC on 2004-04-22
Reports on Inco AGM 2004
Inco sets sights on restoring dividend in 2005 - Payments stopped in 1999 could restart if progress made on Voisey's Bay, Goro
By Shirley Won, with files from reporter Wendy Stueck in Vancouver, Globe and Mail
Thursday, April 22, 2004
Toronto -- Nickel giant Inco Ltd. could reinstate quarterly payments to shareholders as early as next year, chairman and chief executive officer Scott Hand said yesterday.
The company stopped paying dividends in 1999 when nickel prices were low and two big new projects were in the works.
"The earliest would be 2005," Mr. Hand told reporters after Inco's annual meeting.
Mr. Hand said renewed dividend payments would depend on projects in both Voisey's Bay in Newfoundland and Goro in New Caledonia being well under way, but not necessarily in production.
Mr. Hand said Voisey's Bay is expected to start production by 2006. And he is "optimistic" Inco will proceed with its stalled Goro project in the South Pacific, but that decision won't be made until August.
Inco expects to deliver a progress report on Goro next month following a review aimed at getting that project on a firm financial footing. Goro was put on hold in late 2002 after preliminary cost estimates for the project soared.
The green light for a dividend would also depend on maintaining Inco's financial strength, Mr. Hand said.
Inco expects to generate $1.3-billion (U.S.) in cash flow this year while capital expenditures are expected to be about $1-billion.
Inco's stock, which closed yesterday at $44 (Canadian), has nearly doubled from its 52-week low of $24.60 last May.
On Tuesday, Inco reported a first-quarter profit of $255-million (U.S.) or $1.26 a diluted share compared with a year-ago profit of $33-million or 5 cents. Revenue totalled $1.09-billion, compared with $593-million in the same quarter last year.
During the 1990s, Inco gradually cut its dividend to 10 cents in 1998 from $1 in 1991, and eliminated the payments entirely in 1999.
At that time, the price of nickel had plunged to around $2.10 a pound on the London Metal Exchange. Nickel prices surged on strong demand over the past two years, and averaged $6.68 a pound during the first quarter, the third-highest quarterly average since the LME began trading the metal in the late 1970s.
Nickel prices are expected to stay strong until at least 2006, when major new projects are expected to come into production.
Before the meeting, about 25 demonstrators -- from Port Colborne, Ont., and as far away as New Caledonia and Guatemala -- protested what they described as Inco's "deplorable" environmental and social track records in their communities.
The protesters from Port Colborne accused Inco of delays in cleaning up soil in the Southern Ontario community where Inco ran a refinery between 1918 and 1984.
Some Port Colborne residents have been trying to have their case -- over health problems they claim are related to Inco's former operations -- certified as a class action.
Mr. Hand said Inco has pledged to remedy the situation and is ready to "do the right thing" and to date has spent over $17-million (Canadian) on a community-based public health process in Port Colborne.