Vale reports Q3 earnings of US$23.4 million
Wednesday, October 31 2012 - 12:25 AM WIB
IDX-listed PT Vale Indonesia Tbk recently stated it achieved a strong performance in the third quarter of this year of 20,418 tons, resulting from a successful ramp‐up of the upgraded Electrical Furnace 2 operation.
The company stated it produced 23% more nickel in matte and delivered 29% more nickel in matte to its customers in the third quarter compared to the second quarter of 2012, from 16,534 tons to 21,345 tons.
PT Vale also produced 49,411 tons of nickel in matte during the first nine months of 2012. In the same period, the company shipped 50,611 tons of nickel in matte, which was slightly lower than the deliveries for the first nine months of 2011, while its average realized price for the third quarter of 2012 was US$12,570 per ton, which was 9% lower than the 2Q12 average realized price. Even with the decline in price, the Company recorded 17% higher sales in 3Q12 than in 2Q12 because of the higher volume of nickel in matte deliveries.
"The average price of nickel in matte realized by the company for the first nine months of 2012 was 29% lower than the average price achieved in the same period of 2011, resulting from 31% lower sales in the period compared to the corresponding period in 2011," the company said.
Although Vale sold 17 percent more nickel in matte in Q3, its total cost of goods sold (COGS) increased only by 3% compared to the the previous quarter. This is mainly related to higher operation efficiency and lower prices for fuel and consumables, in which Vale consumed 670,143 barrels of High Sulphur Fuel Oil (HSFO) at an average cost of US$107.49 per barrel compared to 554,226 barrels at an average cost of US$116.33 per barrel in the previous quarter.
In 3Q12, the Company also used 13,854 kilolitres of diesel fuel at an average cost of US$0.85 per litre while in 2Q12 it consumed 13,222 kilolitres at an average cost of US$0.90 per litre.
The COGS for the first nine months of 2012 was US$596 million compared to US$532 million in the first nine months of 2011. The 12 % increase is mainly related to services and contracts and employment costs. Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled US$59.7 million in 3Q, compared to US$30.9 million in 2Q. Higher EBITDA recorded in 3Q12 than in 2Q12 was due to increased deliveries to customers and lower costs per metric ton partially offset by a lower average realized price during the period. EBITDA achieved in the first nine months of 2012 was 75% lower than in the same period of 2011, mainly due to a lower average realized price.
The company recorded earnings of US$23.4 million in 3Q (US$0.0024 per share) compared to US$1.7 million (US$0.0002 per share) achieved in 2Q. Meanwhile, earnings for the nine month period ended September 30, 2012 and 2011 were US$28.9 million and US$319.9 million, respectively.
Vale?s cash and cash equivalents as of September 30, 2012 and June 30, 2012 were US$171.7 million and US$138.5 million respectively.
In 3Q, the company spent another US$31 million in capital expenditures, primarily for the sustainability of operation and the Dryer Coal Conversion Project (CCP), which is to improve cost efficiency. Construction of the Dryer CCP is on schedule to be and is expected to be completed at the end of 2012 and commissioned in the first quarter of 2013.
"We believe that the 3Q12 operational performance can still be improved based on the progress of the Operational and Maintenance Improvement Program (OMIP) and other initiatives. PT Vale is also aiming higher production targets in the next quarters," the company said, adding that it plans to increase its production capacity to 120,000 tons per year in the long term.
Editing by Er Audy Zandri