INCO to buy back shares in bid to boost share price

JAKARTA (JP): Publicly listed PT International Nickel Indonesia (INCO) plans to buy back some of its shares from the public as part of its plan to prop up the share price, the company's president said.

Rumengan Musu, INCO's president and chief executive officer, said he had submitted the proposal to the Capital Market Supervisory Board (Bapepam), but had not gotten approval from the board.

"The board told us it was better not to do it now," Musu said Tuesday after the company's annual general shareholders' meeting.

He did not say how many shares the company would buy back but there was an indication that the plan was aimed to prop up the shares' price which has sharply dropped since its initial public offering (IPO).

The company sold around 20 percent of its shares at the local stock exchanges at Rp 9,800 (around US$4.08 at the current rate) during the IPO in 1990.

Last January, the price had dropped to Rp 3,050, and on Tuesday the shares closed at Rp 3,100.

According to the company's 1996 annual report, INCO is 58.73 percent owned by INCO Limited of Canada, 20.09 percent by Sumitomo Metal Mining Co. Ltd, 20 percent by the public, 0.54 percent by Tokyo Nickel Company, 0.36 percent by Mitsui and Co. Ltd, 0.14 percent by Nissho-Iwai Ltd, and another 0.14 percent by Sumitomo Shoji Kaisha Ltd.

At yesterday's meeting, shareholders approved a final dividend of 5 U.S. cents per share for 1996 which will be paid on June 4. The interim dividend was paid on Dec. 12 last year at an equal amount per share.

Musu said his company's dividends had been set at the same level for the past several years because it needed extra capital expenditure for its on-going expansion project in Soroako, South Sulawesi.

The project will cost the company US$580 million in investment, he said.

He said capital expenditures would rise to US$289 million this year, compared to $178 million in 1996 and $63 million in 1995.

"Out of the $289 million in this year's capital expenditures, some $245 million will be related to the expansion," he said.

The project is planned to increase INCO's annual production capacity from the current 100 million pounds of nickel to 150 million pounds.

The company's net profit dropped by over 35 percent to $61 million in 1996 from its 1995 earnings.

Musu attributed the drop to the world's low nickel prices, reduced deliveries, increase in unit cost and higher income taxes.

"Last year there was a surplus in the supply of nickel while the demand for the commodity of stainless steel production declined," he said.

But Musu said he was optimistic that the supply and demand for nickel would be in balance this year, as stainless steel production would continue to grow.

He predicts that in 1998, the demand for nickel will exceed its supply, raising the price of the commodity. (02)