Higher 9M11 Financial Performance of 9M11 Due to Increases in Sales Volumes and Commodity Prices
Following increases in the demand of ferronickel which boosted sales volumes, ANTAM’s unaudited revenue for 9M11 grew by 36% compared to 9M10 to Rp7.8 trillion. Ferronickel was the largest contributor to the revenue, accounting for 40% of the total sales or Rp3.1 trillion. Export markets remained the main destination of ANTAM’s main commodities with 73% of the total company’s products worth of Rp5.7 trillion being exported.
Sales Performance
Ferronickel and Nickel Ore
In 9M11, the sales volume of ferronickel increased by 37% to 14,985 tons of nickel contained in ferronickel (TNi) in line with the prolonged high demand in 9M11 compared to the same period of 2010. To accommodate the high demand, ANTAM’s ferronickel operated at optimal level in 9M11 with a total production achievement of 14,990 TNi. The ferronickel production volume as of the end of September 2011 has reached 83% of the 2011 production target of 18,000 TNi, while the sales volume of the period has reached 81% of the 2011 sales target of 18,500 TNi. The increase in the sales volume of ferronickel coupled with a 14% increase in the price of the commodity to US$10.8 per pound, causing the revenue attributable to the sales of ferronickel in 9M11 to increase by 49% compared to 9M10 to Rp3.1 trillion.
With the prolonged high demand of nickel ore, the sales volume of nickel ore in 9M11 rose by 9% compared to 9M10 to 4,443,685 wet metric tons (wmt). To correspond to the high demand, the production level of nickel ore was also increased, and as of the end of 9M11 the production volume of the commodity increased by 17% compared to 9M10 to 5,875,816 wmt. With increases in the sales volume and prices of nickel ore, the revenue attributable to the sales of the commodity in 9M11 surged by 10% compared to 9M10 to Rp1.8 trillion. The nickel ore production achievement as of the end of 9M11 is 76% of the 2011 production target of 7.8 million wmt, while the sales volume of the commodity as of the end of 9M11 has reached 71% of the 2011 sales target of 6.3 wmt.
Gold
As of the end of 9M11, the sales volume of gold reached 5,859 kg exceeding the 2011 sales target of 5,820 kg. The 9M11 gold sales volume increased by 17% compared to the 9M10’s sales volume. ANTAM’s 9M11 gold production volume recorded at 2,004 kg, up by 6% from 9M10 and reached 66% of the year’s production target of 3,025 kg. The lower than expected production level was due to the lower grade of the gold ore at the Pongkor gold mine. ANTAM is also yet to mine the targeted gold veins at the Cibaliung gold mine. With the increase in the sales volume of gold as well as a 33% increase in the price of the commodity to US$1,564.12 per toz, ANTAM’s revenue attributable to the sales of gold grew by 97% to Rp2.6 trillion.
Bauxite and Coal
Despite the fact that ANTAM no longer produces bauxite, ANTAM was still selling its stock of the commodity mined from the Kijang mine. The sales volume in 9M11 recorded at 145,218 wmt with an export value of Rp15 billion.
In 9M11, ANTAM through its subsidiary, PT Indonesia Coal Resources, produced 422,456 tons of coal with a sales volume of 219,160 tons. Coal sales in 9M11 contributed revenue of Rp29.6 billion.
Profitability and Financial Position
With a sharp increase in sales, ANTAM’s gross profit surged by 42% compared to 9M10 to Rp2.6 trillion with a gross margin of 33% compared to the 32% margin of 9M10. ANTAM’s cost of goods sold recorded a 34% increase to Rp5.2 trillion, due to the increases in the cost of fuel and materials inline with higher ferronickel production. The increases in these two cost components were in line with the rise in the production level of ferronickel as well as the increase in the price of fuel.
ANTAM’s operating income grew by 50% to Rp1.9 trillion with an operating margin of 25%, higher than the 22% operating margin of 9M10. The income before tax of the company increased by 63% to Rp2.1 trillion inline with other income of Rp177 billion, which was largely attributable to the receipt of dividend income from PT Nusa Halmahera Minerals.
With cash and cash equivalents amounting to Rp2 trillion and investment loans value of Rp112 billion, ANTAM still holds a robust net cash position to support the funding of its growth projects.
Construction of the CGA Tayan Project Reaches 34.15%; ANTAM Prepares to Issue Bonds; Preparation of FeNi Halmahera Project Groundbreaking Ceremony is Underway
ANTAM’s key projects, including the Chemical Grade Alumina (CGA) Tayan project, the Ferronickel Halmahera project, the Modernization and Optimization of the Pomalaa Ferronickel Plants project, the Smelter Grade Alumina (SGA) Mempawah project, and the Nickel Pig Iron (NPI) Mandiodo project are progressing as planned.
The construction of the CGA Tayan, which is being developed by PT Indonesia ChemicalAlumina, a jointly controlled entity of ANTAM and Showa Denko KK Japan, reached a 34.15% completion as at the end of September 2011. PT Indonesia Chemical Alumina also began the gradual fund drawdown from its investment credit facility provided by JBIC and a consortium of Japanese banks in the middle of October 2011.
ANTAM continues the preparation to issue corporate bonds to help fund its routine investment as well as business development activities. The issuance of Rupiah denominated obligation is planned to commence at the end of 2011.
ANTAM is also in the process of preparing a groundbreaking ceremony of its FeNi Halmahera project at the end of 2011. The project will increase ANTAM’s ferronickel production capacity to 27,000 TNi per annum and is estimated to cost US$ 1.6 billion, including the cost to build a US$600 million power plant. ANTAM plans to synergise with PT PLN (Persero) to put together the power plant and the discussion related to Power Purchase Agreement (PPA) with PLN is still ongoing.
ANTAM’s SGA Mempawah project and the NPI Mandiodo project are both progressing as planned and are at the phase of feasibility study completion.
