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)