INCO doubles net profits in 2004
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
PT International Nickel Indonesia (INCO) doubled its net profit in 2004 as higher nickel prices and record-setting production boosted sales, company president and chief executive Bing Tobing says.
Net profits rose US$265.1 million in 2004, from $104.2 million the year before, supported by a 56 percent jump in sales revenues from $509 million in 2003 to $792.1 million.
The sharp increase in sales was attributable to higher nickel prices and a boost in production. The publicly listed company produced 159.1 million pounds of nickel in 2004 -- the highest ever for the firm -- up from 154.8 million pounds the previous year.
"The production of 159 million pounds of nickel in matte was the highest in our history and we are targeting an equally strong output of 160 million pounds in 2005," Bing said.
As for the prices, nickel in 2004 averaged at $10,766 a ton, or $4.88 a pound, up 51 percent from an average of $7,117 per ton, or $3.23 per pound, in 2003 based on the benchmark prices at the London Metal Exchange.
PT INCO is one of the largest nickel producer in Indonesia, with 61 percent of its shares owned by Canada-based Inco Ltd., the world's second-largest nickel producer.
In the longer term, the company plans to boost its production to 200 million pounds by 2009, and to achieve that, the firm would develop another hydropower plant at Karabbe on the Larona river in Southeast Sulawesi.
The dam is worth $150 million in investment, and a preliminary survey surrounding the areas was already underway.
The company, which operates the nickel mine in Sorowako of Southeast Sulawesi and is currently exploring another mine at Bahudopi in Central Sulawesi, has two dams to support the existing production process.
In total, it has a nickel mining license covering 218,000 hectares in South Sulawesi, Southeast Sulawesi and Central Sulawesi.
"We are still considering several measures to finance the construction. It can be from our own financial resources, issuing bonds, or seeking loans from financial institutions," Bing said.
With the sound financial showing, the company is facing a bright outlook in fulfilling its debts commitments, before embarking on business expansion afterwards.
"We have an outstanding debt amounting to $115.4 million, which is slated to be repaid by March next year, and the company will have by then the ability to expand in a prudent manner," Bing said.
In 2004, it repaid about $77 million in maturing debts.