Antam unaudited 2011 profit increased 13.5% to 1.91t

By Demas Simbolon

State owned mining company PT Aneka Tambang Tbk (Antam) recently announced that its unaudited consolidated net profit increased by 13.5 percent to Rpl.91 trillion for 2011 from the Rpl.68 trillion recorded for 2010, mostly due to higher sales of ferronickel, nickel ore, and gold.

Antam's earnings per share in 2011 was Rp200.57 raising from Rp l76.77 in 2010. Antam's 2011 consolidated financial statements and notes are currently being audited by public accountant firm Purwantono, Suherman & Surja (a member firm of Ernst and Young Global). The full audit results are expected to be completed by end of March at the latest.

"Our 2011 results reflect a significant production and sales increase due to higher sales of our main commodities. Last year also saw the commencement of our long term strategic initiative in line with the start of the construction of the US$450 million Tayan Chemical Grade Alumina project and the US$1.6 billion East Halmahera Ferronickel Project. We are confident the financial and operational performance of the company in 2012

will remain solid and continue to deliver strong shareholders'returns," said Antam's President Director, Alwinsyah Lubis in a statement.

Antam's unaudited sales recorded an increase of 18 percent in 2011 to Rpl0.3 trillion. The company acknowledged that ferronickel was the largest contributor to Antam's 2011 revenue, with up to 36 percent contribution to the total revenue, or equivalent with Rp3.7 trillion.

2011 was the record year for Antam's ferronickel production and sales, with up to 19,690 TNI of produced ferronickel or 5 percent higher than the production in 2010. The sales volume of ferronickel in 2011, on the other hand, reached 19,527 TNI, with 1 percent increase of revenue to Rp3.7 trillion despite 2011's lower average selling price of the commodity by 3 percent to US$9.83 per pound.

Antam also stated that demand of nickel ore remained robust in 2011, resulting in higher nickel ore production of 13 percent compared to 2010 to 7,959,157 wmt, which consisted of 3,512,151 wmt of high-grade nickel ore and 4,447,006 wmt of low-grade nickel ore.

The increase in the production of nickel ore was also followed by an 8 percent increase in the sales volume in 2011 to 6,345,742 wmt. With the increase in sales volume, Antam's nickel ore revenue rose 5 percent in 2011 to Rp2.5 trillion compared to 2010.

The company's 2011 gold production volume reached 2,667 kg, which was comprised of Pongkor's gold output of 1,987 kg and Cibaliung's gold production volume of 680 kg. The gold production volume decreased 4 percent from 2010 due to lower grades of the gold ores mined from Pongkor. As both Pongkor and Cibaliung mines are underground mines, the grades of gold ores extracted from these two mines are beyond the company's control.

Although Antam had a lower gold production, strong demand of gold boosted sales volume to 8,009 kg in 2011, an increase of 22% compared to 2010. With the increase in sales volume and average selling price of gold by 32 percent over 2010 to US$1,620.44 per toz , Antam's 2011 revenue from gold reached Rp3.7 trillion, up by 56 percent from the previous year.

The company also stated that its gross profit in 2011 rose 3 percent from the previous year to Rp3 trillion in line with a 26 percent rise in cost of sales to Rp7.32 trillion, largely due to significant increase of cost of precious metals purchases corresponding to higher gold demand.

Due to higher increase of cost of sales over Antam's revenue, gross margin was lowered to 29 percent in 2011 from 34 percent in 2010.

Antam's operating profit, on the other hand, rose 1 percent to Rpl.99 trillion in 2011 from Rpl.97 trillion in 2010, though operating margin was lowered to 19 percent in 2011 from 22 percent in 2010.

This should reveal that Antam's financial structure remains strong and solid. At the end of 2011, Antam had cash and cash equivalents of Rp5.6 trillion, a 33% increase over Rp4.2 trillion in 2010.

The company had Rp3 trillion of Rupiah denominated bonds issued at the end of 2011 largely to fund Antam's ferronickel smelters modernisation and optimisation projects.

Editing by Audy Zandri