Antam 2001 net profit down; mulling US$100-150 million bond issue
Tuesday, April 2 2002 - 11:24 PM WIB
Sentiment towards PT Aneka Tambang is cautious after news the company's 2001 net profit fell 6.7 pct from a year earlier and amid continual delays in Antam securing an estimated 200 mln usd loan from a German bank to fund construction of its third Ferronickel smelter, AFX Asia reported
Analysts said investors are concerned Antam will pay a lower dividend for 2001 after earnings were hit by a lower nickel price and higher production costs.
An industry source close to the company earlier today told AFX-Asia that Antam's 2001 net profit fell to 359.3 bilion rupiah from 383.2 billion (US$ = Rp. 9,700), largely due to the higher cost of goods sold after the July 17 explosion at its Ferronickel I smelter.
Antam would not confirm or deny the earnings figures, saying it expects to release full year audited earnings by next Monday at the latest but hopefully by Friday.
"I think sentiment towards the stock is being impacted by expectations of a lower dividend payment for 2001 because most stockholders were expecting the dividend payment to be higher than the previous year since sales were higher," a local brokerage analyst said.
Antam earlier this year reported unaudited 2001 sales of 1.73 trillion rupiah compared to 1.57 trillion a year earlier.
A deal with Japan's Pacific Metals Co Ltd to refine ferronickel from Antam's mines enabled it to fulfil customer orders and meet its sales target of around 10,300 tonnes of contained nickel in ferronickel despite the fire at FeNi I, which resumed full operations in October.
The analyst said the higher sales figure had boosted expectations of a better than expected bottom line but such hopes have been eroded by the realisation that the Pacific Metals deal meant higher transportation and production costs as Antam sent all nickel ore to Japan to be processed into ferronickel.
"This will cause the dividend payment to be lower, at around 116.8 rupiah per share, which is below most stockholders' expectations," the analyst said.
The industry source said Antam is expected to propose cutting its 2001 dividend payout ratio to 40 percent of net profit from 50 percent in 2000.
Earnings per share decreased to 291.9 rupiah last year from 311.31, the source said.
He said operating profit fell to 509.4 billion rupiah from 549.6 billion, as the cost of goods sold increased 28 percent to 1.1 trilion from 860 billion.
In addition to the FeNi I fire, a lower nickel price and higher fuel costs also contributed to the sharp rise in the cost of goods sold.
Analysts said sentiment towards Antam is also being undermined by delays in the company securing up to US$ 200 million in financing from IKB Deutsche Industriebank AG for its ferronickel III project.
A source within the company said Antam is considering a bond issue valued at around US$100-150 million to help fund the construction of the US$ 350 million smelter should the IKB loan fall through.
"It (the bond issue) is still very much a backup plan so there's no decision on exact dollar figures or structure, but the amount of money Antam would be looking for would range from US$ 100 million to 150 million," the source said.
"Because of the renewed interest in Asian corporate bonds, that possibility has a bit more credence, a bit more focus as a contingency plan," he added.
If the bank does provide the loan, of the balance, around US$ 70-80 is expected to come from a local consortium of banks led by PT Bank Mandiri and another US$ 70 milio from the proceeds of Antam's 1997 initial public offering, the source said.
He said Antam is still very optimistic of securing the IKB loan this quarter, but said should it fall through, Antam is hoping the Bank Mandiri consortium will be able to increase the size of its loan, or that the project's contractor would provide some funding so as to make up the difference.
A bond issue would then likely fill the rest of the gap.
Antam's talks with IKB have been delayed partly due to concerns over Indonesia's country risk, which is why Antam must secure insurance coverage for the loan.
It received preliminary approval from Hermes last year to mandate a PriceWaterhousecoopers final analysis of the project, a precondition to final approval from Hermes.
If this approval is forthcoming, Antam would then seek shareholder approval at the annual general meeting, expected to be held in May.
Antam expects to start building the new plant in the second half of this year and to start full commercial operations by 2005.
The new smelter is estimated to double Antam's ferronickel capacity to 26, 000 tonnes per year.
The Indonesian government has a 65 pct stake in Antam.(*)