PT Vale enjoys profitable quarter despite low nickel price
Friday, October 23 2015 - 02:12 AM WIB
The company?s unaudited results for 3Q15 show earnings of US$10.0 million.
?Our earnings have remained positive in this tough commodity cycle due to a strong focus on executing our business strategy,? said Nico Kanter, CEO and President Director of the company in a statement Thursday.
?We continue to improve our efficiency and to reduce costs. In this quarter, PT Vale lowered its quarterly unit cash cost of revenue even further, surpassing the level reached last quarter which, at that time, was the lowest recorded in the last five years,? he added.
PT Vale said it achieved this result while also maximizing production. Production in 3Q15 was 15 percent higher than production in 2Q15. In this quarter, nickel matte deliveries also increased 20 percent from the previous quarter. This enabled a 3 percent increase in revenue from the previous quarter, despite a 14 percent decrease in average realized nickel price.
PT Vale said it maintains its full year production target of around 80,000 metric tons (mt) of nickel. However, the company said it is now closely monitoring the predicted prolonged dry season that may affect availability of electricity from the hydroelectric dams near Soroako, in South Sulawesi, and is examining available alternatives and potential impacts to production.
The company said quarterly cost of revenue per ton of nickel matte sold was the lowest in the last five years. This is due mainly to lower energy costs, dilution of fixed cost per unit as a result of higher production and Rupiah depreciation, it explained.
PT Vale said it continued to improve its fuel usage per unit of production as a result of better operational efficiency. In addition, PT Vale gained from lower prices on High Sulphur Fuel Oil (HSFO), diesel oil and coal.
The following table shows PT Vale?s High Sulphur Fuel Oil (HSFO), diesel fuel and coal consumption in 3Q15, 2Q15, 9M15 and 9M14.
| ? | 3Q15 | 2Q15 | 9M15 | 9M14 |
| HSFO volume (barrels) | 478,705 | 426,242 | 1,280,049 | 1,231,842 |
| HSFO average price per barrel | US$58.31 | US$62.01 | US$62.95 | US$99.94 |
| Diesel volume (kilo litres) | 19,281 | 15,471 | 52,048 | 47,155 |
| Diesel average price per litre | US$0.53 | US$0.58 | US$0.58 | US$0.90 |
| Coal volume (t) | 105,225 | 89,565 | 287,097 | 269,574 |
| Coal average price per t | US$83.64 | US$101.16 | US$92.70 | US$162.51 |
Nonetheless, PT Vale said it had to book $9.3 million in currency translation losses in 3Q15 as part of other expenses. This materialized when Rupiah assets ? mainly tax-refund receivables ? were revalued at the end of the reporting period when the Rupiah (Rp) severely depreciated against the US dollar (US$).
PT Vale said it aims to thrive under the current price volatility and will continue to control its costs and manage its cash flows prudently. The company?s cash and cash equivalents as of September 30, 2015 was $318.5 million; which was higher than the cash and cash equivalents as of June 30, 2015 of $270.1 million.
PT Vale said it has assessed its capital expenditure plan for 2015 and will reduce its forecast sustaining capital expenditures by around 6.5 percent to around $110.8 million. The company added it will also defer all capital expenditures for growth to the following years as several permits and licenses required for development were delayed. This will not affect compliance to regulations, cost reductions, production or the sustainability of the operation. During the nine-month period the company has incurred approximately $76.2 million for sustaining capital expenditures.
| 3Q15 | 2Q15 | 9M15 | 9M14 | |
| Nickel in matte production1 | 22,147 | 19,251 | 58,875 | 58,141 |
| Nickel matte deliveries1 | 22,750 | 19,006 | 59,796 | 58,867 |
| Average realized price per metric ton2 | 8,944 | 10,405 | 10,254 | 13,119 |
| EBITDA3 | 56.7 | 58.3 | 186.4 | 280.5 |
| Revenue3 | 203.5 | 197.8 | 613.1 | 772.3 |
| Earnings3 | 10.0 | 16.8 | 51.9 | 130.4 |
| Earnings per share2 | 0.0011 | 0.0017 | 0.0052 | 0.0131 |
| 1 metric ton (t), 2 US$, 3 US$ million | ||||