Press Release: S&P: Antam ratings unchanged after financial year earnings

Standard & Poor's Ratings Services said on Wednesday that Indonesian nickel and gold mining company PT Aneka Tambang's (B/Stable/--) announcement of improved earnings results for fiscal 2003 is within expectations and doesn't by itself affect the rating or outlook of the company.

Based on unaudited figures, Antam's revenue rose 25% to 2.1 trillion rupiah (US$250 million) and net income climbed 20% to IDR242.9 billion in fiscal year 2003. The improved earnings largely reflected the company's higher sales level; volume sales of ferronickel and gold increased 8% and 18%, respectively, while selling prices rose an average of 27% and 17% over the previous year. Offsetting this, however, was a 25% increase in operating cost, most of which was labor related. Operating margin (excluding depreciation and amortization) in 2003 therefore remained unchanged at 25%.

Following Antam's bond issuance of US$200 million in September 2003, gearing (total debt to total capital) has risen significantly to 44.8% at the end of 2003, from 8.8% in 2002. Nevertheless, Antam's cash-flow protection measures remain adequate with funds from operation to total debt of 23.9%.

Construction of a third nickel smelting facility has commenced and, so far, is on schedule. Commercial operation of this facility is expected to begin in 2006.

Antam recently said there was a fire in one of its gold mine. Standard & Poor's understands this happened in a mining area that has largely been depleted. Therefore, Antam's future gold production isn't expected to be significantly affected.(*)