- The Washington Times - Tuesday, February 11, 2003

Shares of USEC Inc., the only U.S. company that enriches uranium for use in commercial nuclear-power plants, inched up yesterday from their lowest price since Dec. 31.
The Bethesda company's stock rose 8 cents yesterday to close at $6.23 on the New York Stock Exchange. On Friday, shares fell 17 cents to $6.15 as investors reacted to a strike of more than 600 workers at one of the company's key facilities.
Analysts said the strike of the Paper, Allied-Industrial, Chemical and Energy Workers union at USEC's plant in Paducah, Ky., should not have a long-term effect on the company's earnings, provided that the job action ends within the next month.
USEC said 635 workers, or half of the Paducah work force, began striking Feb. 4 after rejecting the company's five-year contract proposal. The company said it will have no trouble operating the plant with the remaining workers and other employees who have been trained.
"They have been able to operate at the same level as before," said USEC spokeswoman Elizabeth Stuckle. "We have contingency plans to do this indefinitely if we have to."
The strike follows the announcement of heavy financial losses stemming largely from the "cold standby" status of the company's plant in Portsmouth, Ohio. Cold standby refers to when the Department of Energy ceases uranium production because it is not required.
USEC last week reported a net loss of $14.7 million, or 18 cents per share, for the last six months of 2002, down from earnings of $4.8 million, or 6 cents per share, a year ago. Until this year, the company did not report quarterly.
"It was one in a series of disappointing earnings releases," said David Schanzer, analyst at Janney Montgomery Scott.
Analysts said USEC is at a disadvantage compared with its competitors because it enriches uranium using a relatively antiquated process called gaseous diffusion. While it remains the only uranium-enrichment company in the country, other energy firms around the world have gained a competitive advantage, analysts said, because they use more modern techniques.
USEC is investing about $10 million per year on centrifuge technology. The company said in December that it will house a test facility at the Portsmouth plant by 2004. By then, Urenco Ltd., a Britain-based company that competes directly with USEC, will have a facility in the United States.
Analysts said the news about USEC is not all bad. Mr. Schanzer said the company's yearly dividend yield, at about 9 percent, makes the stock attractive, particularly after news that dividends may no longer be taxed.
The United States still gets about 20 percent of its energy from nuclear-power plants, meaning its use of nuclear energy has not fallen sharply in recent years as expected, analysts said.
What's more, owners of nuclear-power plants have tried to ensure that nuclear power is more reliable for customers.
In the long term, Mr. Schanzer said, USEC might benefit from China's growing use of nuclear energy for electricity. Even if the country used nuclear plants to produce only 10 percent of the power it needs, it would represent more nuclear energy use than that of the United States.
"Nuclear power has some future," Mr. Schanzer said. "No one should assume nuclear power is dead."

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