Thursday, February 11, 2010

Inco posted U$$60 million earnings

PT International Nickel Indonesia Tbk posted net earnings US$60 million in the fourth quarter 2009, decrease from US$75.9 million in third quarter. The company performance in the last quarter of 2009 compared to the third quarter of 2009 was primarily impacted by a planned three week maintenance shutdown of one of its electric furnaces resulting in lower production, lower deliveries of nickel in matte and lower net earnings.
Inco posted EBITDA totalled US$106.1 million in the fourth quarter of 2009, compared to US$128.3 million in the third quarter of 2009. Sales revenue was US$234.8 million for the three months ended December 31, 2009, a decrease of 6 per cent as compared to US$249.8 million in the third quarter of 2009.
Nickel in matte deliveries totalled 17,095 metric tons in the fourth quarter of 2009 as compared to 18,653 metric tons in the third quarter of 2009. Lower deliveries were compensated by an increase in the average realized price for nickel in matte, which averaged US$13,733 per metric ton during the fourth quarter of 2009 as compared to US$13,394 per metric ton in the third quarter of 2009.
Production of nickel in matte in the fourth quarter of 2009 was 17,029 metric tons as compared to 17,800 metric tons in the third quarter of 2009. “After running some of the our thermal generators for a brief period in the third quarter, we decided to restart our thermal generators in October 2009 to produce more nickel in matte to benefit from higher nickel prices, as well as in an effort to conserve our water levels,” said Claudio Bastos, the Company’s Vice-President Director, today.
The annual nickel in matte production in 2009 was 7 per cent below our 2008 production, as we relied mainly on hydro generating power in 2009 only operating the thermal generators for 15 weeks in 2009 compared to 43 weeks in 2008.
As a result of the decision to re-start the thermal generators, the cost of goods sold in the fourth quarter of 2009 increased to US$142.2 million from US$133.6 million in the third quarter of 2009. PTI consumed 24,702 kilolitres of diesel fuel at an average cost of US$0.5 per litre in the fourth quarter of 2009 compared to 13,764 kilolitres at an average cost of US$0.48 per litre in the third quarter of 2009.
In addition, the Company consumed 605,706 barrels of high sulphur fuel oil (HSFO) at an average cost of US$69.81 per barrel compared to 588,719 barrels at an average cost of US$61.30 per barrel in the third quarter of 2009.
Nevertheless, the fourth quarter results show that the Company’s non-fuel related costs continued to decrease. The cost of goods sold in 2009 decreased 36 per cent to US$516.1 million as compared to US$808.5 million in 2008. This significant decrease resulted from an overall reduction in fuel consumption and fuel prices over the course of the year, as well as reductions in other major cost components such as services and contracts, royalties and employment costs.
In the fourth quarter of 2009, cash provided by operating activities was US$93.5 million; which added to the cash balance at the beginning of the quarter, allowing Inco to pay an interim dividend of US$106 million on December 29, 2009.
Construction of a third hydroelectric power plant at the Karebbe site is underway at a cost of US$410 million. All fabrication packages are progressing as planned. The Karebbe project is expected to come on stream in the second half of 2011. The project will produce enough hydroelectric energy to displace all existing oil and diesel generation to feed the electric furnaces at the Sorowako facility and is the main initiative in Inco’s energy cost reduction program.
Under the previously announced loan facility provided by a group of Japanese banks, with the support of Nippon Export and Investment Insurance, the Company recovered a portion of the disbursements made on the Karebbe Project, by making the first drawdown on December 30, 2009 of US$150 million. A second drawdown is expected in March 2010 and will fund the conclusion of Karebbe project.
“PTI completed the installation of Electrostatic Precipitators (ESP) at its three remaining Reduction Kilns in 2009 which was well ahead of schedule. This brought the Kilns’ particulate emissions down to World Bank guidelines,” added Mr. Bastos.
The Company plans to spend US$257.7 million on capital expenditures in 2010, which consists of US$112.1 million for sustaining capital, US$141.3 million for growth capital, and US$4.3 million for health, safety and environment.

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