P.T. International Nickel Indonesia 1997 Earnings of $24.3 Million (U.S.) Reflect Adverse
Weather Conditions
PR Newswire - February 06, 1998 14:46
N. %MNG %ERN V%PRN P%PRN
JAKARTA, Feb. 6 /CNW-PRN/ - P.T. International Nickel Indonesia (''P.T.
Inco'') announced today its unaudited results for 1997. Net earnings for the
year 1997 were $24.3 million, or 10 cents per share, compared with $61.2
million, or 25 cents per share, in 1996. A loss of $1.1 million, or nil per
share, was incurred for the fourth quarter of 1997, compared with net earnings
of $7.2 million, or three cents per share, in the corresponding period of
1996.
The decrease in net earnings in the fourth quarter of 1997, relative to
the corresponding 1996 period, was due to lower deliveries, attributable to
the loss of production resulting from the effect of the ''El Nino'' weather
phenomenon on the Company's ability to generate hydroelectric power, and lower
nickel price realizations. Results for the year 1997, relative to 1996,
principally reflected lower deliveries and lower nickel price realizations.
The Company's net realized price for nickel in matte averaged $2.50 per
pound in 1997 and $2.30 per pound in the fourth quarter of 1997, compared with
$2.72 per pound and $2.53 per pound, respectively, in the corresponding
periods of 1996. 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 in the fourth quarter of 1997 was adversely affected by the
drought conditions associated with the ''El Nino'' weather phenomenon.
Production of nickel in matte for the fourth quarter of 1997 was 8.6 million
pounds, compared with the 12.7 million pounds recorded in the corresponding
1996 period. As a consequence of the drought conditions, the Company was
unable to generate sufficient power from its hydroelectric facilities to power
its three electric furnaces and undertook aggressive action to reduce the
impact of the drought on the Company's future production. This action included
shutting down two of the Company's electric furnaces while completing a major
deepening of the channel from Lake Towuti to increase the flow of water to the
hydroelectric facilities during periods of low rainfall and low lake levels.
The work was completed on time, and by the end of 1997 rainfall had returned
to the region, allowing the Company to return to production in January 1998.
The resultant loss of production in the fourth quarter, relative to planned
production, was approximately 20 million pounds of nickel in matte. Production
for the year 1997 was significantly lower than usual due to the scheduled
major rebuild and upgrade of Furnace No. 1 in the first half of the year and
by the effects of the drought conditions in the second half of the year.
Cash provided by operating activities was $62.2 million in 1997, down from
$190.0 million for the year 1996, principally reflecting lower earnings.
Capital expenditures were $239.1 million in 1997, compared with $177.5 million
in 1996, reflecting increased expenditures associated with the expansion
project. The Company's long-term debt increased to $290.4 million at December
31, 1997 from $111.9 million at December 31, 1996, principally reflecting the
drawdown by the Company of $178.5 million under its available credit
facilities to finance its expansion project.
The Company's $580 million expansion program to increase its annual
production capacity by 50 per cent remains on schedule and on budget. The
Company, subject to adequate seasonal rainfall, expects to produce
approximately 95 million pounds of nickel in matte in 1998, reaching an annual
rate of 115 million pounds in late 1998, with gradual increases in production
in 1999 and full production at the new rate of 150 million pounds in 2000. |
