PT Vale?s Q1 net profit drops by 42.8%

By Ruli Setiawan

IDX-listed nickel miner PT Vale Indonesia Tbk announced on Wednesday that unaudited net profit in the first quarter of this year dropped 42.8 percent to U$18 million from $31.5 million in the same period of last year mainly due to weak prices.

The company said in a statement that revenue fell 17.5 percent to $213.1 million in the first three-month period of this year from $258.4 million in the same January-March period of last year.

The company said that although cost-focus strategy and higher production volumes managed to lower cost of revenue during the quarter, the weak prices undermined profitability.

Cost‐focus strategy adopted to combat the low price environment started to show benefits. Cost of revenue ? excluding inventory movements ? per metric ton (t) of nickel in matte production in the first quarter of 2014 declined by 17 percent to $9,012 per ton from $10,849 per t incurred in the first quarter of 2013 mainly driven by lower fuel, lubricant and employee costs, as well as showing the benefit of fixed cost dilution due to higher production volumes, the firm said.

Lower fuel and lubricant costs were primarily driven by High Sulphur Fuel Oil (HSFO) consumption in the first quarter of 2014, the firm said.

PT Vale saw production volume during the first quarter increased by 6 percent from the same first quarter period of last year. The company also registered higher deliveries to customers during the quarter.

Elsewhere, the company said that in 2014 it will retain its focus on improving costs to sustain competitiveness in the long run. ?The company also will continue to leverage its enhanced smelting capacity and process optimization and plans to produce 5 percent more nickel in matte in 2014 than in 2013, at around 79,600 tons,? it said.

Production and financial highlights

?	1Q14	4Q13	1Q13
Nickel in matte production?	19,604	18,299	18,514
Nickel matte deliveries?	19,423	18,577	18,899
Average realized price per metric ton?	10,972	10,797	13,673
EBITDA?	49.3	40.7	74.0
Revenue?	213.1	200.6	258.4
Earnings?	18.0	(8.6)	31.5
Earnings per share?	0.0018	(0.0009)	0.0032
? metric ton (t), ? US$, ? US$ million

Editing by Johannes Simbolon