Sales
During the first quarter of 2009, ANTAM’s sales rose by 26% to Rp2,642 billion over the same period last year. Higher sales was due to increased revenue from gold and silver trading activities. For the first time in ANTAM’s history, gold sales became the biggest contributor to total sales, reaching Rp2,110 billion or 80% of ANTAM’s sales in the first quarter of 2008. The second largest contributor to sales was nickel ore, generating Rp259 billion or 10% from ANTAM’s total sales. Ferronickel was the third largest contributor, generating Rp137 billion or 5% from total sales.
Due to more intensive trading by ANTAM’s Logam Mulia unit, sales volume of gold rose by 211% in 1Q09 to 6,005 kg. Higher sales volume coupled with a 1% increase in gold price to US$925,58 per t.oz., boosted revenue from gold sales by 300% to Rp2,110 billion compared to Rp528 billion which was generated during 1Q08. Despite increased gold sales, materials cost for gold trading also rose significantly inline with higher gold scrap purchase for further processing and sales in the form of gold bars. During 1Q09, 88% of Logam Mulia’s sales came from trading activities with third parties which generated smaller margins compared to gold sales which are sourced from ANTAM’s own Pongkor gold mine.
As nickel demand decreased during the first quarter of 2009, sales of nickel decreased by 60% to 801,939 wmt over 1Q08. High grade nickel ore sales amounted to 554,774 wmt in 1Q09, a 42% decrease over the same period last year, while sales of low grade nickel ore decreased by 76% to 247,165 wmt. Lower sales volume coupled with a 56% decrease in the average selling prices of nickel ore to US$27.89 per wmt lowered nickel ore sales revenue by 78% to Rp259 billion.
Lower nickel demand and sales price also impacted ANTAM’s ferronickel products. Sales volume of ferronickel decreased by 8% in 1Q09 to 1,161 tonnes nickel contained in ferronickel (TNi). Lower sales volume was due to lower customer’s demand largely attributed to the global economic crisis. As the average selling price of ferronickel decreased by 63% over the same period last year to US$4.72 per lb., revenue from ferronickel decreased by 58% to Rp137 billion. The average selling price of ferronickel in 1Q08 was US$12.69 per lb.
ANTAM’s gold and refinery business segment which includes revenue from gold, silver and refinery services, became the biggest contributor to ANTAM’s total sales with 84% contribution amounted to Rp2,225 billion. ANTAM’s nickel segment which includes revenue from ferronickel and nickel ore contributed 15% or Rp396 billion from ANTAM’s total sales.
Cost of Sales
ANTAM’s cost of sales rose 143% over 1Q08 to Rp2,479 billion due to a significiant increase in materials cost which was attributed by high trading activities in the Logam Mulia unit. Materials used, the largest component of cost of sales, rose 254% over 1Q08 to Rp2,020 billion. A decrease in nickel ore and ferronickel production lowered ore mining fees by 43% to Rp200 billion. Salaries, wages, bonuses and employee benefits decreased by 28% over 1Q08 to Rp88 billion due to reduction of overtime working hours at ANTAM’s operational level as part of the company’s cost reduction program. Lower premium and performance benefits inline with decreased production and profits also contributed to lower salaries, wages, bonuses and employee benefits. Fuel costs decreased by 22% over 1Q08 to Rp163 billion due to lower ferronickel production at Pomalaa.
Materials Used
The largest component of ANTAM’s cost of sales in 1Q09 was materials used, which rose 254% compared with 1Q08 to Rp2,020 billion. Materials used contributed 81% of ANTAM’s cost of sales, in which 93% was attributed to gold and silver scrap purchase for Logam Mulia’s trading activities. The cost of materials used at Logam Mulia rose 510% over 1Q08 to Rp1,879 billion. Cost of materials used at Pomalaa contributed 5% from total cost of materials used. Cost of materials used at Pomalaa decreased by 58% over 1Q08 to Rp99 billion. Materials used at Pomalaa is largely attributed by raw materials, including nickel ore, for ferronickel processing, and include other consumables such as limestone and anthracite.
Ore Mining Fees
The second largest component of ANTAM’s cost of sales was ore mining fees, which contributed 8% from total cost of sales in 1Q09. Ore mining fees, which was largely attributed to nickel ore mining, decreased by 43% to Rp200 billion. Nickel ore mining contributed 85% or Rp170 billion from total ore mining fees in 1Q09. Lower ore mining fees was due to lower production of nickel ore inline with decreased sales volume, as well as several re-negotiations with third party contractors and vendors in lieu with the global downturn.
Fuel Used
Cost of fuel used, the third largest component of cost of sales in 1Q09, decreased by 22% compared to 1Q08 to Rp163 billion, largely attributed to a 27% drop in ferronickel production. During the first quarter of 2009, cost of fuel used contributed 7% to ANTAM’s cost of sales in 1Q09. Although the cost of fuel decreased in 1Q09, the average fuel prices in 1Q09 was relatively stable year-on-year. In the first quarter of 2009, the average price of Marine Fuel Oil (MFO) was Rp4,260 per liter, an 8% decrease compared to 1Q08 price. The average price of Industrial Diesel Oil (IDO) was Rp7,358 per liter, an increase of 2% compared to the 1Q08 price. In the first quarter of 2009, ANTAM consumed almost 32 million liters of fuel, in which 94% was MFO.
Depreciation
The fourth largest component of ANTAM’s cost of sales was depreciation, which rose 6% over 1Q08 to Rp136 billion. Increased depreciation expense was due to depreciation from the FeNi III smelter. ANTAM’s ferronickel facilities at Pomalaa contributed 77% to the total depreciation expense while the Pongkor gold mine and factory contributed 22% to to the total depreciation expense in 1Q09.
Salaries, wages, bonuses and employee benefits
The fifth largest component of ANTAM’s cost of sales with a 5% contribution was salaries, wages, bonuses and employee benefits which decreased 28% compared to 1Q08 to Rp88 billion. Lower salaries, wages, bonuses and employee benefits was due to lower overtime payment inline with lower production as well as lower premium and estimation of performance benefits which was attributed to decreased production and profit estimation. The largest component of salaries, wages, bonuses and employee benefits was post retirement costs of Rp26.5 billion which was calculated based on the 2009 actuarial estimates. 59% of salaries, wages, bonuses and employee benefits was attributed to the Nickel Mining Business Unit while 26% of the costs was attributed to the Gold Mining Business Unit.
Gross Profit
Inline with a significant jump in cost of sales, ANTAM’s gross profit decreased by 85% over 1Q08 to Rp162 billion. During the first quarter of 2009, ANTAM’s gross profit amounted to 6% compared to 51% of gross margin during the first quarter of 2008.
Operating Expenses
ANTAM’s operating expenses decreased by 20% to Rp107 billion, largely attributed by a 66% lower exploration expenses to Rp6 billion inline with decreased exploration activities at several mining licenses areas, due to mining license issues. Meanwhile, decreased nickel demand lowered selling and marketing expenses by 23% over 1Q08 to Rp20 billion. The general and administrative expenses decreased by 9% over 1Q08 to Rp80 billion.
Operating Profit
ANTAM’s operating profit decreased significantly by 94% to Rp55 billion, generating a 2% operating margin compared to 45% operating margin in 1Q08.
Although the revenue of the gold and refinery business segment rose 287% over 1Q08 to Rp2,225 billion, its operating margin only rose by 8% to Rp200 billion, due to lower margin from trading activities. ANTAM generated higher revenue from the sale of its Pongkor gold. During the first quarter of 2009, the margin on the trading activities (the margin of the Logam Mulia unit) amounted to 3% while the margin from the Pongkor gold sales (operating margin of the Gold Mining Business Unit) was 47%.
Inline with lower selling prices of nickel, revenue of ANTAM’s nickel segment decreased by 74% over 1Q08 to Rp396 billion. As the production costs of ANTAM’s nickel segment was relatively stable due to stable fuel prices, the significant drop in nickel sales prices put ANTAM’s nickel segment at a loss. ANTAM’s nickel segment posted a loss of Rp74 billion in 1Q09.
Other Income, Tax and Net Profit
ANTAM’s Other Income rose 397% over 1Q08 to Rp52 billion due to Rp11 billion forex gain inline with the depreciation of the Rupiah against the US Dollar in the first quarter of 2009. In the first quarter of 2008, ANTAM posted Rp108 billion of forex loss. Interest income rose 2% to Rp50 billion. Other income decreased by 92% over 1Q08 to Rp6 billion largely due to the Rp55 billion of interim dividend from PT Nusa Halmahera Minerals in 2008.
ANTAM’s profit before income tax decreased by 89% over 1Q08 to Rp107 billion. After an Rp18 billion of income tax and Rp1 billion of minority interests in net income/loss of consolidated subsidiaries, ANTAM’s net profit amounted to Rp90 billion, an 87% decrease over 1Q08. ANTAM’s net margin amounted to 3%, a sharp decrease compared to 32% in the first quarter of 2008.
Consolidated Balance Sheet
Total Consolidated Assets
ANTAM’s total consolidated assets in first quarter of 2009 decreased 14% to Rp10,317 billion mainly contributed from lower current assets account.
Current Assets
ANTAM’s current assets decreased Rp1,710 billion or 23% to Rp5,882 billion or contributed 57% of total current assets mostly attributed to lower cash and cash equivalents position by 28% to Rp3,291 billion and lower account receivables by 43% to Rp473 billion. Inventories-net position also decreased 13% to Rp1,598 billion. Decrease in account receivables account was mainly due to lower sales to some customers, including Raznoimport Nickel, customers via Avarus AG, Mitsubishi Corp and Mitsui & Co, Ltd. Decrease in inventory-net mainly attributed to allowance for decline in value on inventories amounted to Rp144 billion as a result of global market condition triggered lower nickel price. ANTAM believes that the provisions for obsolescence and decline in value are adequate to cover possible losses on inventories.
In first quarter of 2009, ANTAM placed Rp2,605 billion or 79% of total cash and cash equivalents to time deposits in several domestic and foreign banks. 69% of total time deposits were in Rupiah, 17% in US Dollar and 14% in Australian Dollar. Interests applied in time deposits varied from 11.5% - 12.5% (Rupiah), 5% (USD Dollar) and 4%-5.25% (Australian Dollar). ANTAM also placed cash in current accounts amounted to Rp686 billion by distribution of 64% in US Dollar, 28% in Rupiah and the remaining in Australian Dollar and Japanese Yen.
ANTAM’s product inventories (gross) rose 53% to Rp1,005 billion albeit ANTAM booked lower inventories-net as triggered by higher ferronickel inventory (gross) by 215% to Rp497 billion and the 6% increase in gold and silver inventory to Rp252 billion.
Non-Current Assets
ANTAM’s non-current assets remained at similar level of Rp4,434 billion. Fixed assets decreased to Rp2,791 billion in line with depreciation after expansion of FeNi III came to an end and commercial operations of FeNi III began in the beginning of 2007.
ANTAM booked its investments in shares of stock of Rp92 billion or 81% decrease compared to first quarter of 2009 mostly due to transaction in Herald Resources Limited on July 16, 2008 and increase of ANTAM’s ownership at PT Indonesia Chemical Alumina (PT ICA) from 49% to 65% resulted in consolidation of PT ICA financial statement. ANTAM posted increase in deferred exploration and development expenditure by 25% to Rp658 billion and booked estimated claims for tax refund of Rp270 billion as lower net income compared to budgeted figures resulting in a tax over payment in 2008.
Total Consolidated Liabilities
ANTAM total consolidated liabilities decreased 17% to Rp2,118 billion due to lower current liabilities by 39% to Rp670 billion and non-current liabilities dropping by 2% to Rp1,448 billion.
Current Liabilities
ANTAM’s current liabilities decreased 39% to Rp670 billion mainly due to lower taxes payables which decreased 81% to Rp29 billion as ANTAM posted lower net income. Accrued expenses decreased 64% to Rp177 billion mostly due to lower mining and transportation services fees amounting to Rp84 billion or falling 41% and lower exploitation cost by 55% to Rp32 billion. No nickel purchases for the ferronickel plants in the first quarter of 2009 led to lower accrued expenses for the same period last year where ANTAM booked Rp168 billion.
Non-Current Liabilities
In first quarter 2009, ANTAM’s non-current liabilities was at Rp1,448 billion or decreased 2% compared to same period last year. The total investment loans (posted in current and non-current liabilities) decreased 24% from US$97.67 billion to US$74.33 billion.
Total Consolidated Stockholders’ Equity
ANTAM’s total consolidated stockholders’ equity decreased 14% to Rp8,151 billion mainly due to payment of dividend that reached Rp2,052.98 billion based on 2007 performance and resulted in lower retained earnings by 16% to Rp7,145 billion. ANTAM posted Rp13.4 billion of treasury stock due to share buyback program from the market which reached 15,460,000 shares.
Cash Flows
Inline with a sharp decrease in the nickel selling prices and sales volume, ANTAM’s cash flow decreased significantly in the first quarter of 2009. As such, ANTAM’s cash and cash equivalents at the end of the period decreased by 28% to Rp3,291 billion from Rp4,568 billion during the first quarter of 2008.
Cash Flow from Operating Activities
Despite higher revenue from gold and refinery business segment, as ANTAM’s ferronickel and nickel ore sales volume and selling prices decreased significantly, cash receipts from customers decreased by 7% over 1Q08 to Rp2,734 billion. ANTAM incurred a 71% increase over 1Q08 of payment to suppliers to Rp2,522 billion inline with higher gold scraps purchase. Despite a 6% lower payment to commissioners, directors and employees to Rp131 billion, a 93% lower tax payment to Rp77 miliar, and a Rp71 billion tax restitution payment, ANTAM’s net cash provided by operating activities decreased by 80% over 1Q08 to Rp83 billion.
Cash Flow from Investing Activities
Net cash used in investing activities decreased 82% over 1Q08 to Rp93 billion, as ANTAM did not conduct investment in shares of stocks as opposed to 1Q08 which incurred Rp434 billion.
Cash Flow from Financing Activities
ANTAM did not incur cash flow from financing activities as the repayment of its long term borrowings is conducted on half yearly terms.
