Antam's Net Profit Jumps 225% To RP950 Billion In The First Nine Months Of 2010
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Jakarta, November 2nd, 2010 – PT Antam (Persero) Tbk (Antam; ASX - ATM; IDX - ANTM) is pleased to announce unaudited consolidated net profit increased 225% to Rp950 billion, and Earnings per Share (EPS) of Rp99.81 for the first nine months of 2010 (9M10), up from the Rp293 billion, and EPS of Rp30.69 of the first nine months of 2009 (9M09). The increase is largely attributed to higher prices of Antam’s main commodities and higher sales volumes of ferronickel and nickel ore which have higher margins. Antam posted a significant increase of net profit despite lower sales as management significantly reduced precious metals trading activities inline with the gold price fluctuations which increased risks.
Antam’s net sales decreased 9% to Rp5.7 trillion from Rp6.3 trillion in 9M09. The reduction of Rp539 billion is nearly all due to the lower revenue from gold and silver as Antam reduced precious metals trading activities. Gold and silver sales dropped 48% to Rp1.9 trillion over 9M09. Sales of precious metals trading activities were 56% of total gold and silver revenue in 9M10. Reduced trading activities made gold sales volume lowered by 50% to 5,004 kg as well as a 39% decrease in the sales of silver to 32,252 kg. During 9M10, Antam produced 2,035 kg of gold in which 1,884 kg came from Pongkor and 151 kg came from Antam’s new mine at Cibaliung. Silver production at Pongkor amounted to 14,058 kg with production at Cibaliung reached 524 kg.
Revenues from ferronickel increased by 54% to Rp2.1 trillion due to higher ferronickel sales of 10,966 tons nickel in ferronickel (TNi), an increase of 14%, as production at Pomalaa were stable. Sales volume would have been higher should ferronickel shipment which occurred in the third quarter had arrived at Antam’s customers. Higher ferronickel revenue was also due to a 53% increase of the average nickel price to US$9,48 per lb.
Nickel ore sales, the third largest contributor to revenue, amounted to Rp1.6 trillion, a 37% increase over 9M09 inline with higher sales volume and sales price. During 9M10 Antam sold 4,060,813 wmt of nickel ore which comprised of 2,511,033 wmt of high grade ore and 1,549,780 wmt of low grade ore. Production of nickel ore increased by 10% to 5,011,404 wmt during the first nine months of 2010.
Antam’s bauxite export in the first nine months of 2010 amounted to Rp34 billion, a 28% lower over 9M09 inline with lower sales price and volume, decreasing by 20% over 9M09 to 191,615 wmt.
Antam’s cost of sales decreased 29% to Rp3.9 trillion, as the cost of precious metals purchase dropped by 64% to Rp1 trillion inline with the significant reduction of precious metals trading activities. In the first nine months of 2010, the cost of fuel, the second largest cost component, rose 72% to Rp704 billion inline with the increase of production of ferronickel. The cost of fuel increased in synch with the ramp up in ferronickel production. Due to lower bauxite production, the cost of ore mining decreased 11% to Rp684 billion. Production of bauxite lowered 85% over 9M09 to 104,692 wmt. As the cost of sales decrease exceeded the pace of the reduction of revenue, Antam’s gross profit rose 147% over 9M09 to Rp1.8 trillion. Inline with higher gross profit, Antam’s gross margin in 9M10 amounted to 32% from 12% in 9M09.
Antam’s operating expenses increased 38% to Rp552 billion. The increase was due to higher general and administration expenses, which Antam increased by 45% to Rp457 billion. Higher general and administration expenses were largely due to a 201% increase of Antam’s corporate social responsibility expenses to Rp100 billion. Antam’s operating profit rose 276% to Rp1.3 trillion, resulting in an operating margin which widened from 5% to 22% in 9M10.
During the first nine months of 2010 Antam had Other Income of Rp26 billion, whereas in the first nine months of 2009 Antam had Other Income of Rp20 billion. Antam’s interest expense dropped 68% to Rp44 billion as the interest rates on time deposits lowered during 9M10. Antam posted a Rp174 billion dividend income from its gold joint venture with Newcrest Australia, PT Nusa Halmahera Minerals. Antam achieved net income of Rp950 billion, a 225% increase over the first nine months of 2009, resulting in a net margin which widened from 5% to 17%.
In 9M10, Antam’s total assets grew 9% to Rp10.6 trillion inline with a increase of current assets to Rp6.1 trillion despite a 4% decrease of non-current assets to Rp4.5 trillion. The increase in current assets was largely due to a 9% jump of cash holding to Rp3.3 trillion and a 120% increase in account receivables to Rp975 billion. The increases of Antam’s cash and account receivables were mostly due to increased sales volumes and higher commodity prices.
Antam’s total liabilities decreased 7% to Rp1.7 trillion (excluding minority interests) over 9M09 and were due to, among other things, lower total interest bearing debt by 39% to US$38.25 million because of routine debt repayment. Meanwhile, taxes payable jumped 1,459% to Rp215 billion inline with higher profits. As a result of large cash holding and debt repayment, Antam was in net cash position of Rp2.9 trillion or a 21% increase compared to the same period last year of Rp2.4 trillion.
As further evidenced by low interest bearing debt to equity ratio of 3.9%, current ratio of 6.7 times and working capital of Rp5.2 trillion, Antam’s financial position in 9M10 remains solid and strong and also is in good position to further support its investment plans.
Net cash provided by operating activities jumped in 9M10 by 45% to Rp1.4 trillion due to lower payment to suppliers by 24% to Rp3.8 trillion inline with lower trading activities as well as higher receipts from tax restitution of Rp338 billion or a 377% increase. These posts offset the decrease in cash receipts from customers and increase in tax payment. As Antam posted a 44% lower of net cash used in financing activities of Rp383 billion, Antam’s cash and cash equivalents rose by 9% to Rp3.3 trillion in 9M10.
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