PT.Inco reports decrease in Q3 nickel sales
Wednesday, October 26 2005 - 03:52 PM WIB
Net earnings in the quarter ended September 30, 2005 were $73.2 million, or $0.07 per share, down 16.8% from net earnings of $87.9 million, or $0.09 per share, in the same quarter of 2004.
Sales rose 8.6% to $653.7 million in the first nine months of 2005 from $601.8 million in the corresponding 2004 period. Net earnings in the nine months ended September 30, 2005 fell 4% to $215.1 million, or $0.22 per share, from $224.1 million, or $0.22 per share, in the same period of 2004.
?Although the costs of high sulphur fuel oil (HSFO), diesel and tires more than offset the positive impact of strong metals prices, the Company is attaining strong profitability levels, indicating that our efforts to realize sustainable business enhancements are proving successful, said Bing R. Tobing, President and Chief Executive Officer.
PT Inco is working toward raising its annual production capacity to 200 million pounds of nickel in matte by 2009. Results of geotechnical studies have determined the best position on the Larona River at Karebbe for a new hydroelectric dam and engineering studies are underway.
The Company?s realized price for nickel in matte averaged $11,882 per tonne ($5.39 per pound) in the third quarter of 2005, compared with $10,916 per tonne ($4.95 per pound) in the corresponding 2004 period and $12,237 per tonne ($5.55 per pound) in the first half of 2005.
Production of nickel in matte for the third quarter of 2005 was 19,646 tonnes (43.3 million pounds), compared with 20,104 tonnes (44.3 million pounds) in the corresponding 2004 period. Production of nickel in matte in the first nine months of 2005 rose to 55,646 tonnes(122.6 million pounds) from 55,100 tonnes (121.6 million pounds) in the same period of 2004.
Unit cash cost of production in the third quarter of 2005 rose 24.6% to $2.18 per pound from $1.75 per pound in the same period last year. The principal reason for this change is higher HSFO prices, which climbed to an average of $40.17 per barrel in the third quarter of 2005 from $28.83 per barrel in the corresponding prior year period. During the third quarter of 2005, the average price of diesel rose to $0.41 per liter from $0.22 per liter for the prior year period, mainly due to the elimination of subsidies. Prices of tires, coal, sulphur and electrode paste also negatively affected costs.
In addition, East Block type ore is now being sourced largely from Petea. Its higher moisture and lower iron content means that more HSFO is required in PT Inco?s drying facilities and that PT Inco must blend in limonite to increase the iron content. Costs for mining operations have also increased, with haulage costs rising as a result of Petea?s distance from PT Inco?s processing facilities.
The company said its board of commisioners has approved a semi-annual interim 2005 dividend of $0.025 per share, payable on December 8, 2005.
In 2005 production is estimated to stay flat at 160 million lb, against 159 million last year.(alex)