Indonesia Inco reports 69.4 pct drop in '08 net profit

Published: 22 Feb 2009 18:36:57 PST

JAKARTA, Feb 20 - PT International Nickel Indonesia Tbk <INCO.JK>, one of the world's top nickel producers, said on Friday its 2008 net profit fell 69.4 percent to $359.3 million because of the sharp decline in nickel prices.

The Jakarta-listed company, in which Brazil's Companhia Vale do Rio Doce <VALE5.SA> has a stake, said sales fell 43.6 percent to $1.31 billion in 2008, from $2.32 billion in 2007.

"The results were driven by lower margins on nickel in matte sold, and as a result of lower average selling prices, and lower nickel in matte deliveries," said Arif Siregar, the firm's president director, in a statement.

The company's realised nickel price averaged $17,724 per metric tonne in 2008, a drop of 40.7 percent from the 2007 average of $29,881.

Nickel prices <MNI3> have slumped nearly 80 percent to about $10,750 a tonne since hitting a record high of $51,800 in May 2007, as output cuts by miners have failed to keep pace with the drop in demand from stainless steel producers.

PT Inco produced 72,400 metric tonnes of nickel in matte, down 5.6 percent from 76,700 tonnes on 2007 and below its initial target of 77,000-79,000 for 2008.

The lower output was the result of the company's decision in late October 2008 to turn off all its thermal power generators to cut energy costs, Siregar said.

The company said in November 2008 that it may cut its output by 20 percent this year if prices remained weak.

PT Inco said it plans to spend $228.8 million on capital expenditure this year.