RELEASE: Antam?s net profit jumps 102% to Rp 108b in first half of 2003
Revenues rise 29% on higher sales volume and selling price
Saturday, August 30 2003 - 07:51 AM WIB
?Our six month profit of Rp108bn is a significant improvement over our first half net income of Rp53b last year. The improved financial performance is attributed to normalized production of Antam?s main commodities: ferronickel and gold. In January, we conducted planned repairs on our FeNi I smelter. We also saw improvement in gold production from our Pongkor Gold Mine during the first half of 2003. As well, our cost reduction program has helped significantly in maintaining Antam as one of the world?s competitive producers of nickel and gold.?
Revenue for the six months ended June 30th, 2003 increased 29% to Rp916b or increased 43% in U.S. Dollar terms to USD107m compared to USD75 m in the six months ended June 30th, 2002, mainly due to increased selling prices of Antam?s main commodities, nickel and gold. In addition, Antam?s sales volume also increased in line with improved production volume of ferronickel and gold during the period. However, as 99% of Antam?s revenues in first half of 2003 are U.S. Dollar denominated, sales revenue was offset by the depreciation of the U.S. Dollar against the Rupiah by 9% to Rp8,591.
Sales volume of ferronickel in the first half of 2003 increased 24% to 4,612 ton Ni compared to 3,712 ton Ni in the same period last year. The increase in sales volume is primarily attributed to the increase in production volume as Antam completed planned spot lining repairs on FeNi I facility in January 2003. Antam expects to operate at near capacity for the remaining of the year. Antam?s ferronickel sales amounted to Rp322b in the first half of 2003, a 42% increase compared to Rp226b in the first half of 2002. The increase in ferronickel sales revenue was also attributed to a 29% increase in the average selling price of ferronickel, which increased to USD3.73 per lb. in the first half of 2003, compared to USD2.90 pr lb. in the first half of 2002.
Sales volume of saprolite, or high-grade nickel ore, decreased slightly to 1,089,207 wmt. This was attributed to lower first quarter production due to poor weather conditions. Production during the second quarter improved, due to higher extraction rates. Meanwhile, due to higher demand, sales of low grade saprolite ore (LGSO), increased by 671% to 343,173 wmt in the first half of 2003 compared to 44,494 wmt in the first half of 2002. Sales volume of limonite, or lowgrade nickel ore, decreased to 93,988 wmt in the first half of 2003 compared to 402,346 wmt in the first half of 2002 as customer orders for low grade were replaced with LGSO. Despite lower sales volume of nickel ore by 5% to 1,526,368 wmt in the first half of 2003, revenues from Antam?s nickel ore sales increased by 40% to Rp289b as a result of higher selling prices. Meanwhile, Antam?s gold sales volume for the six-month period ended June 30th, 2003 increased by 40% to 2,083 kg as a result of higher gold ore production. Gold production is expected to remain in line with Antam?s expectations as the company completed safety reinforcement works to resolve the unexpected soft wall conditions. Antam also expects normalized gold ore grades for the remainder of the year. Sales revenue from gold increased by 48% to Rp204b in the six months ended June 30th, 2003, compared to Rp138b in the six months ended June 30th, 2002 in line with higher production.
Costs of sales rose 16% to Rp652b in the first half of 2003. This is due to the increased cost of ore exploitation and processing services that increased 23% to Rp114b in line with higher sales following increased production costs from Pomalaa and Tanjung Buli mine and ferronickel processing services at Pamco in line with the toll smelting agreement. Higher production cost is primarily due to increased fuel prices in the international market. Increased cost of sales is also attributed to higher salaries, wages, bonuses and employee benefits as well as an increase in mine closure cost to Rp7b in preparation for the closure of Gebe nickel mine and Kijang bauxite mine. Gross profit increased by 80% compared to first half of 2002 to Rp264b.
Operating expenses increased by 34% to Rp78b in first half of 2003 due mainly to higher general and administrative expenses. General and administrative expenses increased by 31% to Rp68b, primarily due to the increase of mining closure costs relating principally to Gebe island, which increased to Rp12b. Total operating income increased by 111% from Rp88b in first half of 2002 to Rp186b in first half 2003.
Antam incurred Rp34b of other expenses in the six months ended June 30th, 2003, an 88% increase compared to other expenses of Rp18b in the six months ended June 30th, 2002, mainly attributed to the professional fees related to FeNi III project of Rp15b. The increase in other expenses is also due to lower interest income of Rp12b and lower gains on derivative transactions of Rp4b in the first half of 2003.
Antam continues to focus on this year?s Rp25b cost reduction program. For the Pomalaa facility, savings amounted to Rp18b. Savings were achieved from more efficient use of raw materials, factory consumables and fuel usage. Meanwhile, the cost reduction program at SBU Gold resulted in savings of Rp1.4b for the first half of 2003, primarily as a result of the replacement of imported spare parts with local products (savings of Rp494 million) and inventory reduction (savings of Rp464 million).
Net cash provided by operating activities increased significantly from Rp41b in the first half of 2002 to Rp203b in the first half of 2003, primarily as a result of higher cash receipts from customers in line with increased sales volume. In the first half of 2003, receipts from customers increased 35% to Rp998b while payments to directors and employees increased 26% to Rp116b on higher salaries, wages, bonus and benefits. During the same period, receipts of interest decreased 47% to Rp12b as a result of lower interest rates. In the first half of 2003, cash used in investing activities increased 8% to Rp58b due to payments for fixed assets amounting to Rp45b. Cash at the end of the period increased to Rp706b compared to Rp642b as of December 31st 2002.
Antam?s total liabilities as of June 30th, 2003 decreased 27% to Rp498b as a result of a Rp41b payment of the Gold Project Facility, payment of Rp45b working capital facility from Bank Mandiri and payment of Rp2b two-step loan from the Indonesian government. As of first half of 2003, Antam recorded zero long-term bank loans, including currently maturing portion. Total debt to equity ratio as of June 30th, 2003 was 26% while Antam?s working capital was Rp877b. The current ratio at the end of June 30th 2003 stood at 3.4.
Antam is one of Indonesia?s leading mining operations and operates as a diversified, vertically integrated mining and metals company with nickel and gold as its main products. With over 35 years of mining experience, Antam is amongst the competitive cost producers of its core products, nickel and gold. (End of release)
