PT International Nickel Indonesia Tbk Reports First Quarter 2008
Earnings of US$139.6 Million
JAKARTA, April 25, 2008 (ANTARA) - PT International Nickel Indonesia
Tbk ("PT Inco", or the "Company", IDX:INCO) today announced
unaudited net earnings of US$139.6 million for the first quarter of
2008 (US$0.014 per share), compared to net earnings of US$227.8
million (US$0.023 per share) for the first quarter of 2007. Sales of
US$380 million in the first three months of 2008 compared to
US$446.7 million in the corresponding quarter of 2007. Lower sales
revenue was primarily due to a lower average realized price for
nickel in matte. Production of nickel in matte for the first quarter
of 2008 was 20,136 metric tons, compared to 17,980 metric tons in
the same period in 2007.
"We achieved higher output than at the same time last year, of the
increase approximately 1,200 metric tons was due to deferring our
planned shutdown for electric furnace maintenance to April 2008 and
the balance due to better operations. The production number
representing over 25 per cent of the higher end of our 2008
production target of 78,000-to-79,000 metric tons," said Arif
Siregar, the Company's President Director. "The Company achieved
this result in light of improved nickel grade, maintained power
availability to our electric furnaces and improved production
efficiencies despite the fact that we experienced lower
precipitation level in our main catchment area compared to the same
period in 2007."
"It is our strategy in the current higher nickel price environment
to increase production output by adding fossil fuel fired generators
that provide the Company with increased revenue relative to the
additional marginal cost" added Mr. Siregar.
PT Inco's realized price for nickel in matte averaged US$21,187 per
metric ton in the first quarter of 2008, compared to US$29,149 per
metric ton in the corresponding period in 2007 and US$23,816 per
metric ton in the fourth quarter of 2007.
Unit cash cost of production in the first quarter of 2008 rose 20
per cent to US$8,857 per metric ton from US$7,386 per metric ton in
the same quarter of 2007. This increase was primarily due to the
higher price of high sulphur fuel oil (HSFO) and the higher price
and usage of diesel. These increases were partially offset by lower
employee costs.
In the first quarter of 2008 we used 676,321 barrels of HSFO, a
decrease from first quarter 2007 usage of 708,839 barrels. However,
the average cost of HSFO rose to US$75.63 per barrel in the first
quarter of 2008 when compared to the average cost of US$48.73 per
barrel paid during the same period in 2007. PT Inco also consumed
47,640 kilolitres of diesel fuel at an average cost of US$0.75 per
litre, up from 28,996 kilolitres at US$0.53 per litre in the first
quarter 2007. The significant increase in diesel usage was mainly
due to the addition of 32 diesel generators acquired and put into
use in May and June 2007.
"We are assessing and implementing initiatives to enhance cost-
efficiency and de-link part of our cost structure from the price of
oil. In the short term, we are ensuring that hydroelectric
generating facilities could produce maximum power to our electric
furnaces by continuing our efforts on cloud seeding and energy
conservation. In addition, we are now rebuilding our steam turbine
generator which will operate at a lower cost when compared to diesel
generators. In the medium run, we will be completing our coal
conversion project which gives us flexibility to use coal. In the
longer term, we will further reduce energy cost by completing our
third hydroelectric power generating facility on the Larona River at
Karebbe," continued Mr. Siregar.
Cash provided by operating activities was US$74.4 million in the
first quarter of 2008, down from US$291.5 million in the same
quarter last year. This decrease was mainly because of lower
receipts from customers as we recorded lower average realized price
and higher payments to suppliers due to higher energy prices.
Corporate tax payments during the first quarter of 2008 rose to
US$156.1 million from US$134.0 million in the same period of 2007.
The net increase in cash and cash equivalents of US$43.8 million
brought the quarter-end 2008 cash and cash equivalents balance to
US$338.1 million, higher than the US$294.3 million at December 31,
2007.
Cash capital expenditures were US$28.0 million in the first quarter
of 2008, down from US$28.6 million in the prior year period. PT Inco
plans capital spending of US$212 million in 2008, including: growth
capital projects of US$64 million, sustaining capital expenditures
of US$77 million, and US$42 million for environment, health and
safety.
Prior to March 31, 2008, certain provisions of the Company's 1968
Contract of Work were still in effect. On that date these provisions
expired and the certain provisions of the Extended and Modified
Contract of Work agreed in December 1995 came into force. With the
passing of this important milestone at the end of the first quarter,
the Company requested that its external auditor audit the accounts
of the Company for the first three months ended March 31, 2008. PT
Inco will publish its audited financial results by June 30, 2008.
The Company's unaudited results are summarized below - all figures
in US$ except for nickel in matte production and deliveries which
are in thousand metric tons:
First Quarter Fourth Quarter
2008 2007 2007
Nickel in
matte production: 20.1 18.0 18.6
Nickel in matte deliveries: 17.7 15.1 19.0
Average realized price per metric ton 21,187 29,149 23,816
Net sales -
millions 380.0 446.7 458.5
Net earnings - millions 139.6 227.8 200.5
Net earnings per share 0.014 0.023(1) 0.020(1)
(1) Restated to reflect 10-for-1 stock split approved by
shareholders on December 17, 2007 and effective on Indonesia Stock
Exchange on January 15, 2008.
Under the Company's long-term U.S. dollar-denominated sales
contracts, the selling price of its nickel in matte is determined
based on the greater of Vale Inco Limited's net average realized
price for nickel or a formula based on the London Metal Exchange
cash price for nickel.
At March 31, 2008, the Company's inventories of nickel in matte were
3,230 metric tons, compared with 747 metric tons at December 31,
2007 and 3,544 metric tons at March 31, 2007. Variations in
inventories and deliveries are largely due to shipment scheduling.
For further information, please contact:
Indra Ginting, Director of Investor Relations & Corporate Secretary
[EMAIL PROTECTED]
Claudio Bastos, Senior Vice President and Chief Financial Officer
[EMAIL PROTECTED]
or visit our website at www.pt-inco.co.id.
COPYRIGHT © 2008
