MENU

Paladin chief commits to the future, but what of the company’s?

Uranium producer and explorer Paladin Energy (ASX: PDN) has extended chief executive’s John Borschoff’s tenure by a further year until 31 December 2014. There’s an option for the agreement to be extended a further two years depending on performance. Executive salaries across the company have been reduced or frozen recently as it battles incredibly tough market conditions.

The company has also been in investors’ sights due to consistently disappointing past performance. In fact fellow Fool Tim McArthur highlighted in this excellent article how the Australian Shareholders Association (ASA) identified Paladin chairman Rick Crabb as under pressure himself. The ASA pointed to US$1.3 billion of accumulated losses over the past 19 years and no dividend payment since 1994.

The share price has been in freefall as the company faced a perfect storm of tumbling uranium prices, substantial asset impairments and a global inclination to move away from nuclear as a power source. In fact the company’s recent problems can be traced directly back to the earthquake and subsequent Fukushima nuclear crisis that struck Japan in March 2011.

The company posted a full-year loss of US$474 million in August and has embarked on a significant cost-cutting plan to try and save $60 million over two years. It continues to carry significant balance sheet debt and needs to see a uranium price recovery sooner rather than later.

Foolish takeaway

Persistent uranium price weakening represents a threat — not just to companies like Paladin but to worldwide production of uranium in general. The nuclear economies have taken a hit post-Fukushima as nation-states reconsider the strengths and weaknesses of nuclear power. If the uranium price fall proves a long-term trend rather than short-term reactio,n companies like Paladin face some gale-force headwinds.

3 resources companies to watch

While the future looks tough for uranium, oil, copper, and gold continue to be in high-demand -- and their popularity doesn’t look to be slowing. We’ve uncovered three companies poised to benefit from the rising prices of these commodities. Get our brand-new report -- "3 Tiny Resources Companies That Could Win Big" -- FREE!

Motley Fool contributor Tom Richardson does not own shares in any of the companies mentioned in this article. 

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now