Inco's Q1 profit falls 20% on costs

PT International Nickel Indonesia, a unit of Inco Ltd., the world's second-biggest nickel miner, said first-quarter profit fell 20 percent after an increase in fuel prices pushed up production costs.

Net income declined to US$43.6 million, or 4 cents a share, in the three months ended March 31, from $54.6 million, or 5 cents, a year earlier, the Jakarta-based company said in a statement onits Web site Friday. International Nickel restated its first quarter 2005 earnings.

The company's parent, Inco, based in Toronto, reported on April 20 a drop in first-quarter profit because of higher energy and employment spending. Prices of high-sulfur fuel oil, used in International Nickel's power plants, when cheaper hydroelectricity power isn't available, rose 55 percent to $47.19a barrel in the first quarter.

Production costs increased 27 percent to $2.8 a pound of nickel produced as fuel prices rose. Sales climbed 6.4 percent to $181.9 million from $170.9 million.

"Costs increased because of high energy prices and spending to revamp two furnaces," President Director Bing R. Tobing said in the statement.

International Nickel boosted production in the quarter to capitalize on high nickel prices, it said in the statement.

The company produced 17,400 metric tons of nickel, increasing from 17,300 tons in the previous year. The company's nickel price fell 1.9 percent to $5.05 for every pound sold in the first quarter. (*)