Inco's earnings fell to $61.2m last year

JAKARTA (JP): The publicly-listed nickel in matte producer PT International Nickel Indonesia (Inco) posted a net earnings of US$61.2 million in 1996, a 36.25 percent decrease from $96 million in the previous year.

Inco said yesterday its net earnings per share dropped to 25 U.S. cents, compared to 39 cents per share in 1995, all based on unaudited results.

Net earnings for the fourth quarter of 1996 were $7.2 million, or 3 cents per share, compared with $25.4 million, or 11 cents per share, in the corresponding period of 1995, the company said in a statement.

"The decrease in net earnings in the fourth quarter and the year 1996, relative to the corresponding 11995 periods, principally reflected lower nickel price realizations, lower deliveries, increased unit production costs and higher income taxes," the company said.

The company's realized price for nickel in matte averaged $2.72 per pound in 1996 and $2.53 per pound in the fourth quarter of 1996, compared with $2.95 per pound and $2.92 per pound respectively, in the corresponding periods of 1995, company said.

According to Inco, the selling price of the company's nickel in matte, an intermediate product which is sold under long-term contracts, is determined by a formula which is based upon the London Metal Exchange cash price for nickel.

The company said it produced 12.7 million pounds of nickel in matte in the fourth quarter of 1996, compared with the 27.8 million pounds in 1995.

The low production level in the fourth quarter of 1996 was primarily due to an eruption in Furnace No. 3 in September 1996. The rebuild of Furnace No. 3 was completed two weeks ahead of schedule and returned to full production during the second half of December, it said.

The company explained that property damage resulting from the incident was covered by insurance, subject to a minor deductible, and this incident also qualified for insurance coverage under the company's business interruption policy.

An insurance recovery of $13.6 million in respect of the production loss in the September-December 1996 period has been reflected in other incomes in the fourth quarter of 1996, Inco added.

Unit production costs in 1996, relative to 1995, increased 5 percent, primarily as a result of the lower production in the fourth quarter of 1996, higher oil prices and increased supplies costs, Inco said. (icn)