PT Inco sees jump in second quarter unaudited net earnings

JAKARTA (JP): Publicly listed PT International Nickel Indonesia (Inco) announced on Friday unaudited net earnings of US$29.2 million in the second quarter of 2000, or 12 cents per share, up from $4.1 million (2 cents per share) a year earlier.

Net earnings for the first half of 2000 were $47.3 million, or 19 cents per share, compared to $2 million (one cent per share) in the corresponding period in 1999, Inco said in a statement.

The Canadian mining company, which operates a huge nickel mining and smelting operation in Soroako, South Sulawesi, attributed the increased earnings to higher realizations of nickel price and deliveries, which was partially offset by increased production costs caused by the rise of fuel prices.

"Results would have been better were it not for higher fuel prices and some minor production problems which resulted in deliveries below expected levels," Inco president and chief executive officer Rumengan Musu said.

Inco's realized price of nickel-in-matte averaged $7,871 per ton in the second quarter of 2000, compared to $4,122 a year earlier, and $6,775 in the first quarter of 2000.

Production of nickel-in-matte for the second quarter was 13,779 tons, up from 10,700 tons a year earlier, and from 13,600 tons for the first quarter of 2000.

Production in the second quarter was affected by a change in the ore chemistry which had cut back smelting efficiency and resulted in unplanned repairs to the refractory liner in two of the original reduction kilns.

The loss of production was estimated at 1,627 tons.

"The production problems have now been rectified and we expect increased production in the second half of the year," Musu said, adding that he was optimistic despite indications of a weakening of nickel prices.

Cash provided by Inco's operating activities, before capital expenditures, was $58.3 million in the first half of 2000, including $12 million in the second quarter. This is an increase from $25.2 million in the first half of 1999.

Capital expenditure in the first half of 2000 was $9.2 million, down from $94.8 million a year earlier reflecting the completion of the company's expansion project at the end of 1999.

Cash provided by operating activities was sufficient to finance debt repayments totaling $47.8 million for the first half of 2000. (10)