Inco's net earnings plunge to $7.4m in Q2

Inco's net earnings plunge to $7.4m in Q2

JAKARTA (JP): Publicly listed nickel mining company PT
International Nickel Indonesia (Inco) reported on Thursday that
its net earnings for the second quarter period this year had
plunged to US$7.4 million from $29.2 million recorded in the same
period last year.

Inco president and chief executive officer Rumengan Musu
attributed the drop in earnings to weaker nickel prices amid
weaker global economic activities resulting in softer nickel
demand.

Rumengan said that the company tried to diminish the impact of
the decline in nickel prices by increasing the efficiency of its
operations.

"Our low-cost structure, which is enhanced by our recently
completed expansion, has helped us keep the cash flow strong,"
Rumengan said.

The company's realized price for matte nickel averaged $5,139
per ton in the second quarter of this year, down from $7,871 per
ton in the corresponding period last year.

Rumengan said the production of nickel in the second quarter
this year rose by 13 percent to 15,700 tons from 13,800 last
year.

"The production is affected by the lower grade of nickel ore
mined, resulting in an annualized production rate of 138 million
pounds, slightly below our objective of 140 million pounds for
this year," he said.

Cash provided by Inco's operating activities, but before
capital expenditures, increased to $87.5 million in the first
half of 2001 from $65.5 million in the same period of 2000,
reflecting a decrease in working capital, he said.

Rumengan said Inco must continue to maintain its cash levels
during a slower nickel market given the continued lack of new
credit lines available for corporate borrowers and the rapid
amortization rates of loans.(03)