Sherritt International Corp surprises with bigger loss slashes dividend

TORONTO — Sherritt International Corp. (TSX:S) missed analyst estimates in the fourth quarter, reporting a $673.8 million net loss as it recorded a loss on the sale of its coal business and weaker operating results.Sherritt reported a $38.1 million adjusted net loss in the fourth quarter, equal to 13 cents per share, as a result of a $466.8 million impairment charge related to the coal business and other items.Analysts had expected Sherritt’s adjusted earnings would break even.The company also told shareholders Wednesday that its quarterly dividend will be cut 76% to one cent per common share, starting with the April 14 payment, down from 4.3 cents.It said reduced payout to shareholders was prudent given persistently low commodity prices and its near-term funding requirements, particularly for the Ambatovy nickel project in Madagascar.At the modified payout level, the annual cost of the dividend will be reduced by approximately $39 million in 2014, Sherritt said.Sherritt is a diversified resource company producing nickel, cobalt and other mined commodities as well as oil and gas and electrical power in Cuba.Under standard accounting, Sherritt had a $673.8 million net loss or $2.27 per share in the fourth quarter, including a $136.8 million net loss or 46 cents per share from continuing operations.In the comparable period of 2012, Sherritt had a $16.9 million net loss, or six cents per share, as $7.2 million or two cents of net income from continuing operations partially offset $24.1 million in losses elsewhere.David Pathe, Sherritt’s president and chief executive, said that the company’s simplified asset base will increase its financial flexibility and reduce its cost structure.He added that its metals and its oil and gas businesses performed well in 2013.“In 2014, we will focus on strengthening our balance sheet through debt and additional cost reduction initiatives, while investing prudently in the areas of core strengths — metals and Cuba,” Pathe said.“Our efforts will be directed to building the long-term competitiveness and value of our businesses, while maintaining our financial flexibility in light of persistently challenging market conditions.”

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