Improved costs provide support to PT Vale earnings in 2016
On February 23, 2017, PT Vale Indonesia Tbk (“PT Vale” or the “Company”, IDX Ticker: INCO) announced its audited results for 2016 (4Q 2016). The Company’s cost of revenue performance continued to improve, falling 18% in the year from cost of revenue incurred in 2015. This provided support against a lower nickel price, which fell by 22% on the year over 2015 levels.
“Our improved cost performance helped us record positive earnings and EBITDA despite the challenges we faced throughout the year including a very challenging nickel market,” reported Nico Kanter, CEO and President Director of the Company.
This experience underlines the importance of remaining focused on optimizing production capacity, improving efficiency and reducing costs. ”
The cost of revenue decrease in 2016 was driven mainly by lower costs of fuels, supplies and services offset to a lesser extent by higher employment, depreciation, amortization and depletion costs. While benefiting from a low global oil price, the Company also improved its procurement practices, particularly for strategic material purchases including diesel and HSFO.
PT Vale delivered EBITDA of US$135.0 million in 2016, approximately 74% of which was generated in the second half of the year. The Company’s cash and cash equivalents as of December 31, 2016 and September 30, 2016, were US$185.6 million and US$200.4 million, respectively. In 2016, PT Vale disbursed approximately US$70.2 million in capital expenditures, with approximately 61% of that amount spent in the first half of 2016. PT Vale will continue to exercise prudent control of its spending to preserve cash.
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