Inco's Q1 net profit falls 31%
Inco's Q1 net profit falls 31%
Leony Aurora, The Jakarta Post, Jakarta
Publicly listed PT International Nickel Indonesia (Inco) has
announced a 31 percent drop of unaudited net income in this
year's first quarter on higher production costs and shipping
delays.
The company, a local subsidiary of the world's second-largest
nickel producer Inco Ltd., said in a written statement recently
that its net profit fell to US$50.9 million in the first three
months of 2005 from $73.4 million recorded in the same period a
year earlier.
Unit production cost rose by 28 percent in the three months
ending on March 31 to $2.14 per pound from $1.67 per pound the
previous year as the price of high sulfur fuel, which is used to
fire up the companies furnaces when hydropower is absent, climbed
to an average of $30.46 per barrel from $26.80, respectively.
"With higher recent rainfall, reservoir dam levels at PT
Inco's hydroelectric facilities are returning to normal," the
company's president and CEO Bing Tobing said.
Sales declined 11 percent to $170.9 million in the quarter
from $191.9 million in the corresponding quarter of 2004 due to
slightly lower prices and a delay in shipments.
"We expect the delayed March shipment to be made in late
April," Bing said.
Although Inco produced 38.1 million pounds of nickel in matte
in the year's first quarter, it sold only 32.7 million pounds. In
the corresponding period last year, Inco produced and sold 36
million pounds of nickel in matte.
The Sulawesi-based nickel producer assured that it remained on
target to achieve its production goal of 160 million pounds.
Inco aims to boost its output capacity to 200 million pounds
of nickel matte by 2009 by constructing a 90-megawatt hydropower
plant in Karebbe, Southeast Sulawesi.
The company currently operates a giant nickel mine in
Sorowako, Southeast Sulawesi, with two dams to support the
existing production process.
The estimated cost for the four-year dam construction project
rose to up to $280 million from an initial $250 million due to
changes in the site's geotechnical conditions and rising
commodity prices, the company said.
Inco paid $38.5 million of its debts in March, reducing its
outstanding loan balance of long-term debt to $76.9 million.
It more than doubled its net profit last year as global nickel
prices skyrocketed to a 14-year high, driven mainly by growing
demand from producers of stainless steel and other alloys in
China and the U.S.