Inco's net earnings fell 51% in Q1

JAKARTA (JP): Publicly-listed nickel mine operator PT International Nickel Indonesia (Inco) reported on Thursday a 51 percent drop in its unaudited net earnings to US$8.9 million in the first three months of this year compared to the same period last year.

Earnings per share subsequently declined to four cents a share from seven cents a share, the company said in its first quarter report.

Inco said the lower earnings were caused by the decline in the price of nickel in the first quarter of 2001, which was partially offset by higher deliveries.

"The average cost of oil in the first quarter of 2001 was $25.74 per barrel, compared with $22.03 in the first quarter of 2000, an increase of 17 percent," the company's president and CEO Rumengan Musu said in the statement, adding that costs of sales however increased less than two percent compared to the first quarter of 2000 due to higher production levels.

Inco's realized price for nickel in matte (crude) averaged $5,449 a ton between January and March 2001, compared to $6,775 a ton during the same period last year.

The selling price of the company's nickel in matte -- an intermediate product sold under long-term U.S. dollar denominated contracts -- is determined by a formula based on the London Metal Exchange cash price for nickel.

Production of nickel in matte was 15,200 tons in the first quarter of this year, an increase from last year's first quarter production of 13,600 tons.

Cash provided by operating activities but before capital expenditures decreased to $48 million in the first quarter of 2001 compared with $65.9 million in the same period last year.

Capital expenditures also dropped to $1.7 million between January and March 2001 from $2.6 million during the same period last year, reflecting the company's need to conserve cash for servicing debt requirements, Inco said.

In March, Inco repaid $32.4 million in long-term debt, $6.1 million of borrowings from Inco Limited, and paid $16.7 million interest.

As of the end of March, Inco's nickel in matte inventories were 1,097 tons compared with 1,365 tons as of Dec. 31, 2000, and 1,295 tons as of March 31, 2000.

Variations in inventories and deliveries were largely due to shipment scheduling, it said. (tnt)