Inco profit triples on strong nickel prices, higher output
The Jakarta Post, Jakarta
Publicly listed PT International Nickel Indonesia (Inco), a local subsidiary of the world's second largest nickel company, Canada-based Inco Ltd., announced that its net profit had more than tripled in the first nine months of 2004.
The surge is attributable primarily to a strong nickel price and higher output.
Inco posted a US$208 million profit for the first nine months to September, up from $64.9 million in the same period last year, while sales jumped to $601 million from $346 million.
"During the third quarter, our earnings again benefited from strong nickel prices," Inco president director Bing R. Tobing said on Friday in a statement to the Jakarta Stock Exchange (JSX).
The company's realized price for nickel in matte averaged $10,916 per ton in the third quarter of the year, compared to $7,037 in the corresponding period last year. In the first nine months, the company's realized nickel price averaged $10,737 per ton this year, against $6,581 in 2003.
Under the company's dollar-denominated long-term contracts, the selling price of its nickel in matte is determined by price movements on the London Metal Exchange.
The price of nickel skyrocketed to a 14-year high earlier this year, driven mainly by growing demand from producers of stainless steel and other alloys in China and the United States. But the growing demand has outpaced supply, following operation problems at several giant nickel producers.
Inco, which operates a giant nickel mine in Soroako, South Sulawesi, produced 121.6 million pounds of nickel in matte in the first nine months, up from 116.7 million pounds during the same period last year.
Bing said despite a planned production shutdown during the fourth quarter, the company remained optimistic that it could meet this year's nickel production target of 160 million lbs.
To boost Inco's production capacity, the company is in the process of building a third hydropower plant with a capacity of 90 megawatts (MW) in South Sulawesi. The plant is expected to increase the company's production of nickel to more than 200 million lbs in 2009 and cut fuel oil costs.
Energy made up 35 percent of the company's costs, most of which involved fuel oil purchases.
Inco shares surged by Rp 550 to Rp 10,650 a share on the JSX on Friday following the news.
Regarding the settlement of the company's huge dollar debts, Bing said as of September, the company had reduced its long-term debt to $115.4 million, from $192 million at the end of 2003.
The company plans to repay its remaining debt fully by March 2006.