Inco expects stronger performance this year
JAKARTA (JP): PT International Nickel Indonesia (Inco), a publicly-listed nickel mining company based in Soroako, South Sulawesi, expects to maintain a strong performance this year although there will not be any significant production expansion.
"We're not making any projection for 1996 net profits or sales. But we believe we'll be able to perform very well as nickel prices should remain high this year," Inco's president, Rumengan Musu, told journalists after the annual general shareholders meeting here yesterday.
"All the factors are there for a strong nickel price, which would lead to another excellent year," Musu noted.
For the whole of last year, the company registered a 128.6 percent increase in its net profits to US$96 million.
Inco's net sales rose by 38.9 percent to $301.8 million last year although its production was almost unchanged at 45,500 tons (100 million pounds) as compared to 45,300 tons (99 million pounds) last year.
Musu said that world demand for nickel reached 1 million tons while supply were only 960,000 tons.
The situation then pushed up the average realized prices from $2,18 per pound in 1994 to $2,95 per pound last year.
"We're not predicting nickel prices, but we feel that the situation won't change this year. If it does, demand may drop by only 2 to 3 percent," Musu added
Musu denied that the company's strong performance was due mainly to the sharp increase in nickel prices.
He argued that based on an independent survey report, Inco recorded the lowest production cost of nickel mining companies throughout the world.
"And we will keep reducing costs. We can't rely on prices alone," Musu contended.
At yesterday's meeting, the shareholders approved the management's proposal to pay 10 U.S. cents in dividend per share, this being about 25 percent of Inco's earning per share.
Musu also argued that they couldn't pay more than 10 U.S. cents, the same as 1994's dividend, although the company's profit doubled last year.
"We need money to finance our $580 million expansion project. We have to provide up to 41 percent of the total funds from internal funds. Please don't debate this issue, it has been approved by the shareholders," he told journalists.
Inco's expansion project will result in a 50 percent increase in production capacity from the current level of 100 million pounds to 150 million pounds per annum by 1998.
Yesterday's meeting also appointed Raymond W. Westall as a new director, replacing Martin Robinson, who is set to resign from the company at the end of this month. (08)