PT Inco?s Q2 2001 earnings drops on lower nickel prices
Thursday, July 26 2001 - 04:37 PM WIB
Net earnings for the first half of 2001 were $16.3 million, or seven cents per share, compared with $47.3 million, or 19 cents per share, in the corresponding period of 2000.
"Weaker global economic activity resulted in softer nickel demand and weaker prices which caused the drop in our second quarter earnings . While volatile prices are a fact of life in our business, we can and have reduced the impact of current declining nickel prices by making our operations more efficient and effective,? said Rumengan Musu, President and Chief Executive Officer.
Musu said Inco?s low-cost structure, enhanced by recently completed expansion and very low-cost hydroelectric power supply, had certainly helped the company?s perfomance during low nickel prices.
?Our cash flow remains strong and we are moving forward aggressively toward achieving full production from the expansion. We are also encouraged by the important steps which Indonesia has just taken in an effort to end the period of political uncertainty which has been of serious concern to the business climate in the country,? said Musu.
As the economic picture improves, we remain enthusiastic about the prospects for the nickel business. With global recovery in demand combined with relatively limited major capacity additions announced for start-up over the next few years, PT Inco remains very well positioned to participate in these more favourable market developments, given our expanded production facilities and excellent position in marketing to the stainless steel producers in Asia."
The Company's realized price for nickel in matte averaged US$5,139 per tonne (US $2.33 per pound) in the second quarter of 2001, compared with US$7,871 per tonne (US$3.57 per pound) in the second quarter of 2000. The selling price of the Company's nickel in matte, an intermediate product which is sold under long-term U.S. dollar-denominated contracts, is determined by a formula which is based upon the London Metal Exchange cash price for nickel.
Production of nickel in matte for the second quarter of 2001 was 15,700 tonnes (34.5 million pounds), compared with 13,800 tonnes (30.4 million pounds) in the corresponding 2000 period.
"Production in the second quarter of 2001 was affected by the lower grade of nickel ore mined, resulting in an annualized production rate of 138 million pounds, slightly below our objective of 140 million pounds for this year," Musu added.
Inco operates a nickel mine in Soroako, South Sulawesi. (alex)