Antam posts 56% decrease in 2009 net profit
Monday, March 22 2010 - 06:43 AM WIB
Antam has previously anticipated lower performance in 2009 as global economic crisis lowered nickel demand and prices. As such, Antam lowered its ferronickel and nickel ore production and sales targets for 2009 compared to 2008 actual performance.
Antam?s President Director Alwin Syah Loebis said: ?Inline with the global economic crisis which lowered nickel demand and prices at the beginning 2009, we lowered our ferronickel and nickel ore production and sales targets in 2009. We have accelerated the optimisation program of the FeNi III smelter and implemented agressive cost reduction program to better anticipate lower nickel prices. We were able to save more than Rp220 billion from effienciency programs as well as contracts renegotiation with our suppliers. In 2010, we will target higher ferronickel and nickel ore production and sales in line with improved demand and sales prices.?
Antam?s sales revenue decreased 9% to Rp8,71 1 billion due to lower nickel prices and sales. Nickel prices decreased 32% to US$6.77 per lb. due to a global economic crisis which lowered nickel demand. The decreased global demand also lowered demand for Antam?s ferronickel and nickel ore. On the contrary, gold demand and prices increased sharply amidst decreased value of the US Dollar and increased global insecurity. Despite higher gold demand, Antam was unable to raise its gold production given the constraints of the underground gold mining at Pongkor mine. Gold was Antam?s biggest contributor in terms of sales in 2009 with a value of Rp4,321 billion or a 58% increase over 2008.
Antam?s gold segment (gold, silver and precious metal refinery services) generated Rp4,786 billion in revenues in 2009, an increase of 64% over 2008. The gold segment accounted for 55% of Antam?s total revenues in 2009. Gold sales increased 31% to 12,893 kg due to increased demand. In 2009, gold production reached 2,626 kg, below the company?s target of 2,821 kg due to lower grades. Due to lower gold production, silver production in 2009 reached 22,589 kg, a decrease of 11% over 2008. Although Antam?s gold and silver increased significantly, this was not reflected in the profitability margins as 80% of gold and silver sales came from trading activities. However, due to increased sales volume and price, revenue from gold increased 58% over 2008 to Rp4,321 billion. Antam?s realised gold price of US$970.97 per toz. was an 11% increase over 2008. Sales of silver rose 153% to 87,187 kg inline with higher trading activities. Higher sales volume coupled with a 5% increase of silver price of US$15.01 per toz. resulted in revenue from silver rising 174% over 2008 to Rp429 billion.
In 2010 Antam expects gold production of 2,580 kg and additional 500 kg from Cibaliung Project as well as total sales of 7,980 kg, including trading, respectively. Antam will target silver production and sales of 23,474 kg and 50,494 kg, including trading, respectively, in 2010.
Antam?s sales of contained nickel decreased 17% over 2008 to 14,191 tonnes. Actual sales were higher than the annual target of 14,000 tonnes. Antam?s production of ferronickel reached 12,550 tonnes of contained nickel in ferronickel. Actual ferronickel production exceeded projection of 12,000 tonnes of contained nickel in ferronickel due to consistent power output following the optimisation on FeNi Ill smelter. Antam currently operates the FeNi Ill smelter at 90% of maximum capacity. Due to the lower sales and a 32% lower average selling price of US$6.77 per lb., revenue from ferronickel decreased in 2009 by 39% to Rp2,1 47 billion.
In 2009, Antam produced 3,249,413 wmt of high grade nickel ore and 2,601,916 wmt of low grade nickel ore, totaling 5,851,239 wmt. Annual production of nickel ore exceeded internal target of 5.1 million wmt, albeit an 11% lower over 2008. Antam?s sales of high grade nickel ore and tow grade nickel ore amounted, to 3,323,876 wmt and 1,577,823 wmt, respectively. Total nickel ore sales of 4,901,699 wmt exceeded internal target of 4.3 million wmt albeit an 8% lower compared to 2008. Inline with lower sales volume and prices, revenue from nickel ore decreased 43% to Rpl,696 billion over 2008.
In 2010, inline with higher expectation of nickel demand and improved capacity of Antam?s FeNi III smelter, Antam expects ferronickel production of 18,500 tonnes with sales of 19,000 tonnes. Antam targets nickel ore production of 6.15 million wmt consisting of 3.5 million wmt of high grade nickel ore and 2.65 million wmt of low grade nickel ore. Sales of nickel ore is estimated at 5.35 million wmt consisting of 3.5 million wmt of high grade ore and 1.85 million wmt of low grade ore.
Antam?s bauxite commodity generated Rp79 billion in sales, contributing 1% to Antam?s consolidated revenues. At the end of 2009 Antam ceased mining activities at Kijang bauxite mine due to the depletion of bauxite reserves. (kanti)