Q3 marks another profitable quarter in 2015 despite low nickel price

Press

10/22/2015

Q3 marks another profitable quarter in 2015 despite low nickel price

Jakarta, October 22, 2015 – PT Vale Indonesia Tbk (“PT Vale” or the “Company”, IDX Ticker: INCO) recorded another profitable quarter in the third quarter of 2015 (3Q15) despite the very low nickel price. The Company’s unaudited results for 3Q15 show earnings of US$10.0 million. 

”Our earnings have remained positive in this tough commodity cycle due to a strong focus on executing our business strategy,” said Nico Kanter, CEO and President Director of the Company, commenting on the achievement. “We continue to improve our efficiency and to reduce costs. In this quarter, PT Vale lowered its quarterly unit cash cost of revenue even further, surpassing the level reached last quarter which, at that time, was the lowest recorded in the last five years.” 

PT Vale achieved this result while also maximizing production. Production in 3Q15 was 15% higher than production in 2Q15. In this quarter, nickel matte deliveries also increased 20% from the previous quarter. This enabled a 3% increase in revenue from the previous quarter, despite a 14% decrease in average realized nickel price. 

PT Vale maintains its full year production target of around 80,000 metric tons (mt) of nickel. However, the Company is now closely monitoring the predicted prolonged dry season that may affect availability of electricity from the hydroelectric dams near Soroako and is examining available alternatives and potential impacts to production.

As mentioned above, the quarterly cost of revenue per mt of nickel matte sold was the lowest in the last five years. This is due mainly to lower energy costs, dilution of fixed cost per unit as a result of higher production and Rupiah depreciation. 

The Company continued to improve its fuel usage per unit of production as a result of better operational efficiency. In addition, PT Vale gained from lower prices on High Sulphur Fuel Oil (HSFO), diesel oil and coal.

The following table shows PT Vale’s High Sulphur Fuel Oil (HSFO), diesel fuel and coal consumption in 3Q15, 2Q15, 9M15 and 9M14.

Q315-en.JPG

Nonetheless, PT Vale had to book US$9.3 million in currency translation losses in 3Q15 as part of other expenses. This materialized when Rupiah assets – mainly taxrefund receivables – were revalued at the end of the reporting period when the Rupiah (Rp) severely depreciated against the US dollar (US$).

PT Vale continues to position itself to thrive under the current price volatility and will continue to control its costs and manage its cash flows prudently. The Company’s cash and cash equivalents as of September 30, 2015 was US$318.5 million; which was higher than the cash and cash equivalents as of June 30, 2015 of US$270.1 million.

PT Vale has assessed its capital expenditure plan for 2015 and will reduce its forecast sustaining capital expenditures by around 6.5%, to around US$110.8 million. The Company will also defer all capital expenditures for growth to the following years as affect compliance to regulations, cost reductions, production or the sustainability of the operation. During the nine‐month period the Company has incurred approximately US$76.2 million for sustaining capital expenditures.

PT Vale’s management team firmly believes the Company is on track to execute its strategy of ensuring long‐term profitable growth by improving efficiency and cost competitiveness, and maximizing production through operational excellence.

Readers are encouraged to review the Company’s results. Operational achievements and unaudited financial results are summarized on the following pages.

Click here to obtain the press releases

Click here to obtain PT Vale Indonesia Financial Statements 3Q15


For further information, please contact:
Febriany Eddy, Chief Financial Officer
ptvi.investorrelations@vale.com
PT Vale Indonesia Tbk
Plaza Bapindo, Citibank Tower 22nd fl,
Jl. Jend. Sudirman Kav. 54-55, Jakarta 12190, Indonesia
Tel: +62-21 5249000 Fax.: +62-21 5249010



Q3 marks another profitable quarter in 2015 despite low nickel price