Revenues, Volumes and Prices
ANTAM’s consolidated revenue in the first half of 2009 decreased 21% to Rp4,406 billion, with gold contributing to 58% of sales. Ferronickel and nickel ore contributed 21% and 16% respectively. In total, 67% of ANTAM’s sales were exports.
The major reason for decreased revenues was due to the lower average selling prices of ANTAM’s nickel products inline with worsening global economic conditions. Despite ANTAM’s ferronickel sales dropping 6% to 7,075 tonnes, ANTAM’s ferronickel revenues decreased 57% to Rp928 billion due to lower global prices. The average selling price of ferronickel for the first six months of 2009 dropped 56% to US$5.51 per lb. Meanwhile, a 36% lower total ore sales of 2.35 million wet metric tons (wmt) resulted in a 67% decrease in ore revenues to Rp708 billion.
A significant, 91%, increase in gold sales to 7,454 kg produced a 139% increase in gold revenues to Rp2,565 billion. 82% of ANTAM’s total gold sales came from gold trading activities which have lower margins. The average gold price rose slightly by 2% over the first half of 2008 to US$924.87 per t.oz. Following higher gold sales, sales of silver also rose significantly, by 133% to 33,387 kg. Higher sales volume of silver resulted in a 108% increase in silver revenue to Rp157 billion.
Cost of Sales
ANTAM’s costs of sales increased 24% to Rp3,959 billion in first half 2009. The five major cost components in order of size were purchase of precious metals, ore mining fees, fuel used, materials used, and depreciation, together accounting for 88% of the total cost of production of Rp3,910 billion.
The purchase cost of precious metals rose 225% to Rp2,183 billion inline with higher gold and silver trading activities at ANTAM’s Logam Mulia unit.
With lower nickel ore production, ore mining fees decreased 50% to Rp449 billion. Lower ore mining fees were a result of ANTAM’s effort to renegotiate mining services fees with its contractors as prices of global commodities weakened. Lower mining fees were also due to lower fuel costs. The average price of High Speed Fuel costs decreased 34% to Rp287 billion due to lower ferronickel production as well as lower fuel prices. 98% of ANTAM’s fuel cost is allocated to the nickel operations. In the first half 2009, the average price of Marine Fuel Oil (MFO) of Rp3,978 per litre was 17% lower compared to first half 2008. ANTAM consumed approximately 59 million litres of fuel in first half 2009, in which 94% was MFO.
Inline with lower ferronickel production, materials used, which consists largely of the cost of ore feed and consumables such as limestone, decreased by 39% to Rp277 billion. Most of the ore feed is supplied from ANTAM’s own nickel mines from Pomalaa and Gee.
Depreciation cost rose 5.5% to Rp253 billion. 74% of ANTAM’s depreciation cost came from depreciation expenses of facilities, buildings and machineries at the Nickel Mining Business Unit. 25% of total depreciation cost came from depreciation expenses at the Gold Mining Business Unit.
Operating Expenses
ANTAM’s operating expenses decreased by 36% to Rp248 billion due to lower general and administration (G&A) expenses, which decreased 30% to Rp186 billion due to a 17% lower employees costs of Rp88 billion. Lower employees costs were due to lower employees’ benefits inline with lower profits. ANTAM’s operating margin lowered to 4.5% in first half 2009.
Other Income and Net Income
Despite a 12% increase of interest income to Rp106 billion and a 14% decrease of foreign exchange loss to Rp81 billion, ANTAM’s Other Income in the first half 2009 of Rp76 billion was relatively similar to the same periode of 2008. This was due to a 38% lower dividend receipt at Rp68 billion.
ANTAM’s net income decreased 85% to Rp224 billion resulting in a net margin of 5%.
Total Consolidated Assets
In the first semester of 2009, ANTAM’s total consolidated assets decreased 23% or Rp2,944 billion to Rp9,894 billion. Similiar to first quarter of 2009, the decrease was largely contributed from lower current assets account.
Current Assets
ANTAM’s current assets decreased Rp2,883 billion or 34% to Rp5,523 billion and contributed 56% of total current assets. The decrease was mostly attributed to lower cash and cash equivalents position by 35% to Rp2,899 billion and lower account receivables by 31% to Rp876 billion. Inventories-net position also decreased 17% to Rp1,217 billion.
The major source of the cash was mainly from operation activities particularly cash receipts from customers. Decrease in cash was largely due to lower global nickel price, lower ferronickel and nickel ore sales volume, increased payments to suppliers and dividend payment. Similiar to the first quarter of 2009, the decrease in account receivables account was mainly due to lower sales to ANTAM’s main customers, including customers via Avarus AG, Raznoimport Nickel (UK) Limited, Mitsui & Co. Ltd. and Mitsubishi Corp. The decrease in the inventory-net was mainly attributed to the decline in the value of nickel ore inventories. ANTAM believes that the provisions for obsolescence and decline in value are adequate to cover possible losses on inventories.
In the first semester of 2009, ANTAM placed Rp1,968 billion or 68% of total cash and cash equivalents to time deposits in several domestic and foreign banks. 45% of total time deposits were in US Dollar, 36% in Rupiah and 19% in Australian Dollar.
Non-Current Assets
ANTAM’s non-current assets remained at similar level of Rp4,371 billion in the first semester of 2009. Fixed assets decreased to Rp2,779 billion inline with depreciation expenses following the commercial operations of the FeNi III smelter in the beginning of 2007.
ANTAM booked a Rp111 billion of investments in shares of stock or a 77% decrease compared to the same period last year mostly due to the increase of ANTAM’s ownership in PT Indonesia Chemical Alumina (PT ICA) from 49% to 65% which resulted in the consolidation of PT ICA’s financial statements as well as transactions in Herald Resources Limited. ANTAM also posted a 15% increase of deferred exploration and development to Rp655 billion due to increased exploration activities at Tayan, Obi Island and Pongkor as well as development activities at the Tanjung Buli and Mornopo. ANTAM booked a Rp312 billion of estimated claims for tax refund in the first semester of 2009 as lower net income compared to the budgeted figures resulting in tax overpayment in 2008.
Total Consolidated Liabilities
ANTAM total consolidated liabilities decreased 55% or Rp2,581 billion to Rp2,131 billion due to a 72% lower current liabilities of Rp919 billion and a 12% decrease in non-current liabilities to Rp1,212 billion.
Current Liabilities
ANTAM’s current liabilities decreased 72% to Rp919 billion mainly due to lower dividend payable by 91% to Rp191 billion and lower taxes payables which decreased 94% to Rp18 billion as ANTAM posted lower net income. Accrued expenses decreased 59% to Rp182 billion mostly due to a 48% lower mining and transportation services fees of Rp63 billion and a 45% lower exploitation cost of Rp31 billion.
Trade payables decreased by 31% to Rp133 billion as ANTAM did not conduct nickel ore purchases from PT Inco Tbk in the first semester of 2009. ANTAM made Rp64 billion of nickel ore purchases from PT Inco Tbk in the same period last year.
Non-Current Liabilities
In the first semester of 2009, ANTAM’s non-current liabilities was at Rp1,212 billion or decreased by 12% compared to the same period last year. The total investment loans (both current and non-current liabilities) decreased 19% from Rp793 billion in the first semester of 2008 to Rp641 billion. In US Dollars terms, ANTAM toal investment loans decreased by 27% or US$23 million from US$86 million in the first half of 2008 to US%62.7 million in the first half of 2009.
Total Consolidated Stockholders’ Equity
ANTAM’s total consolidated stockholders’ equity decreased 5% to Rp7,718 billion mainly due to lower first half 2009 profits compared with the dividend amount which was approved in May 2009 and resulted in lower retained earnings by 6% to Rp6,711 billion. ANTAM posted Rp13.4 billion of treasury stocks following a 15,460,000 shares purchase during the company’s on-market buyback program.
Cash Flows
Inline with a sharp decrease in the selling prices and sales volume of nickel, ANTAM’s cash flow decreased significantly in the first semester of 2009. As such, ANTAM’s cash and cash equivalents at the end of the period decreased by 35% to Rp2,899 billion from Rp4,461 billion during in the first semester of 2008.
Cash Flow from Operating Activities
As ANTAM’s ferronickel and nickel ore sales volume and selling prices decreased significantly, cash receipts from customers decreased by 31% over first semester of 2009 to Rp4,089 billion. As well, payment to suppliers rose by 17% to Rp3,423 billion.
ANTAM’s net cash provided by operating activities decreased by 72% to Rp352 billion as a result of sharp decrease in net receipts from operating activities albeit a 29% increase in cash receipts from interest income to Rp112 billion, a 93% decrease in payment for tax which amounted to Rp98 billion and a Rp71 billion tax restitution payment.
Cash Flow from Investing Activities
Net cash used in investing activities decreased 88% to Rp153 billion in the first semester of 2009. Unlike the same period last year, ANTAM did not conduct acquisition of marketable securities, investment in shares of stock and share subscription advances.
Cash Flow from Financing Activities
ANTAM booked a 316% increase in net cash used in investing activities to Rp510 billion mostly due to dividend payment of Rp356 billion and increase in repayment of long term borrowings by 11% to Rp153 billion.
