Subsid's Final Results

RNS Number:2365R
Inco Ld
8 February 2002


               PT INTERNATIONAL NICKEL INDONESIA Tbk REPORTS 
      2001 EARNINGS OF $9.3 MILLION (U.S.) REFLECTING THE SIGNIFICANT 
                        DECLINE IN NICKEL PRICES 

JAKARTA, February 7, 2002 --- PT International Nickel Indonesia Tbk ("PT Inco")
announced today its audited results for 2001. Net earnings for the year 2001
were $9.3 million, or four cents per share, compared with $80.5 million, or 32
cents per share, in 2000. A loss of $8.0 million, or three cents per share, was
incurred in the fourth quarter of 2001, compared with net earnings of $16.9
million, or seven cents per share, in the corresponding period of 2000. 

Commenting on the year's results, Rumengan Musu, President and Chief Executive
Officer, said that: "While we achieved a record level of production in 2001,
this was a challenging year for the Company in terms of profitability due to the
significant decline in the Company's realized nickel price." "We continued to
make steady progress at increasing our production rate to our expanded design
capacity. Total production was 138 million pounds, slightly below our target of
140 million pounds due to lower than expected ore grades," said Mr. Musu.
"However we were encouraged by the fact that the processing facilities operated
above the planned throughput rate, almost compensating for the lower grades," he
noted. "Despite lower earnings, we had more than enough cash flow to fully meet
our debt servicing requirements, which totalled $104.9 million. Our efforts to
conserve cash must continue, particularly in this uncertain economic and
political environment," he added. 

The Company's realized price for nickel in matte in the fourth quarter of 2001
averaged $3,928 per tonne ($1.78 per pound), down 36 per cent from $6,089 per
tonne ($2.76 per pound) in the fourth quarter of 2000. For the year 2001, the
Company's realized price averaged $4,836 per tonne ($2.19 per pound), compared
with $6,744 per tonne ($3.06 per pound) in 2000. 

Production of nickel in matte for the fourth quarter of 2001 was 15,500 tonnes
(34.2 million pounds), compared with 15,800 tonnes (34.9 million pounds) in the
corresponding 2000 period. For the year 2001, the production of nickel in matte
was 62,600 tonnes (138.1 million pounds), compared with 59,200 tonnes (130.5
million pounds) in 2000. 

Mine ore grades were affected by several factors, including more complex geology
and excessive dilution resulting from a higher throughput rate. More extensive
drilling, test pitting and sampling to better delineate the orebody for improved
mine planning and some contract stripping to expose more ore are well underway
to improve this situation. These higher preparatory activities, combined with
the higher plant throughput of lower than normal ore grade, contributed to a
four per cent increase in the Company's nickel unit cash cost of production in
the fourth quarter of 2001, compared with the corresponding 2000 period. The
Company believes the actions being taken to stabilize mined ore grades will
ensure that PT Inco can achieve the production targets at a reduced cost. 

Cash provided by the Company's operating activities, but before capital
expenditures, was $140.2 million for the year 2001, including $21.6 million in
the fourth quarter, compared with $190.1 million in the year 2000. Capital
expenditures for the year 2001 were $28.6 million, down from $32.7 million in
the year 2000. After financing debt repayments and capital expenditures, net
cash flow was $6.8 million in the year 2001, compared with $34.8 million in the
year 2000. 

The Company's summarized results were as follows: 

                                            Fourth Quarter            Year
                                            2001      2000       2001      2000
  
Nickel in matte production:
- thousand tonnes                           15.5      15.8       62.6      59.2
- million pounds                            34.2      34.9      138.1     130.5

Nickel in matte deliveries:
- thousand tonnes                           14.1      16.3       60.5      58.8
- million pounds                            30.9      36.1      133.3     129.7

Average realized price:                  
- per tonne                              $ 3,928   $ 6,089    $ 4,836   $ 6,744
- per pound                              $  1.78   $  2.76    $  2.19   $  3.06

Net sales - millions                     $  55.9   $ 100.8    $ 296.4   $ 401.6

Net earnings (loss)
- millions                               $  (8.0)  $  16.9    $   9.3   $  80.5

Net earnings (loss) per share            $ (0.03)  $  0.07    $  0.04   $  0.32

At December 31, 2001, the Company's inventories of nickel in matte were 3,512
tonnes (7.7 million pounds), compared with 2,055 tonnes (4.5 million pounds) at
September 30, 2001 and 1,365 tonnes (3.0 million pounds) at December 31, 2000.
The company's production of nickel in matte, an intermediate product, is sold
under long-term U.S. dollar denominated contracts to Inco Limited and Sumitomo
Metal Mining Co, Ltd. Variations in inventories and deliveries are largely due
to shipment scheduling.



                   PT INTERNATIONAL NICKEL INDONESIA Tbk 
                     CONDENSED STATEMENTS OF EARNINGS 
              (U.S. $ in Thousands Except Per Share Amounts) 

 
                                          Fourth Quarter            Year
                                          2001      2000       2001      2000
 
Sales                                   $ 55,922 $ 100,785  $ 296,394 $ 401,607
Cost of Goods Sold                        66,780    71,268    259,783   248,282

Gross Profit (Loss)                      (10,858)   29,517     36,611   153,325

Selling, General and
Administration Expenses                      786    (1,816)     2,499     1,900

Operating Profit (Loss)                  (11,644)   31,333     34,112   151,425

Interest Expense                           3,307     9,287     23,395    36,123
Other Income                              (3,478)   (1,273)    (2,678)   (1,442)

                                            (171)    8,014     20,717    34,681

Earnings (Loss) Before
Income Taxes                             (11,473)   23,319     13,395   116,744

Income Taxes                              (3,454)    6,387      4,130    36,262

Net Earnings (Loss)                     $ (8,019) $ 16,932   $  9,265  $ 80,482

Net Earnings (Loss) Per Share           $  (0.03) $  0.07    $   0.04  $   0.32

  

                     PT INTERNATIONAL NICKEL INDONESIA Tbk 
                          CONDENSED BALANCE SHEETS 
                            (U.S. $ in Thousands) 
 

                                               December 31,       December 31,
                                                   2001               2000
ASSETS

Cash and Cash Equivalents                      $    43,490         $   36,718
Trade Receivables from Affiliates                    2,275             37,824
inventories                                         59,480             52,612
Taxes Receivable                                    20,943             17,335
Other Current Assets                                 4,030              5,249

   Total Current Assets                            130,218            149,738
 
Property, Plant and Equipment                    1,055,085          1,121,020
Construction in Progress                            39,259             25,469
Other Assets                                         5,143              4,580
 
   Total Assets                                 $1,229,705         $1,300,807


 
LIABILITIES AND SHAREHOLDERS' EQUITY
  
Trade Payabies                                  $    7,862         $   13,140
Amounts Due to Affiliates                           14,810             14,721
Long-Term Debt Due Within One Year                  64,820             64,820
Other Current Liabilities                           20,621             20,569
                                                   
   Total Current Liabilities                       108,113            113,250
                    
Amounts Due to Affiliates                           42,404             54,519
Long-Term Debt                                     226,812            291,621
Provision for Employee Benefits                      2,959              2,920
Deferred income Tax Liabilities                    113,981            110,031
 

   Total Liabilities                              494,269             572,341

Shareholders' Equity                              735,436             728,466

Total Liabilities and 
Shareholders' Equity                           $1,229,705          $1,300,807
 
  

                       PT INTERNATIONAL NICKEL INDONESIA Tbk 
                        CONDENSED STATEMENTS OF CASH FLOWS 
                               (U.S. $ in Thousands) 
                                                              Year

                                                     2001                2000
Cash Flows from Operating Activities           
   Receipts from Customers                     $  331,943          $  390,788
   Payments to Suppliers                         (163,719)           (173,323)
   Payments to Employees                          (22,302)            (15,627)
   Payment of Pension Contribution                 (2,601)             (2,566)
   Payment of Corporate Tax                        (3,196)             (4,893)
   Other Receipts                                   2,698               1,864
   Other payments                                  (2,592)             (6,119)
   
   Net Cash Flows Provided 
   by Operating Activities                        140,231             190,124


Cash Flows from Investing Activities 
   Payments for Fixed Assets                      (28,572)            (32,703)

   Net Cash Flows Used for Investing Activities   (28,572)            (32,703)
 
Cash Flows from Financing Activities 
   Repayment of Long-Term Bank Loans              (64,810)            (64,809)
   Repayment of Borrowings from Affiliates        (12,116)            (21,465)
   Payment of Interest                            (27,961)            (36,341)

Net Cash Flows Used for Financing Activities     (104,887)           (122,615)

Met Increase in Cash and Cash Equivalents           6,772              34,806
Cash and Cash Equivalents at 
   Beginning of Period                             36,718               1,912
 
Cash and Cash Equivalents at End of Period     $   43,490          $   36,718
 



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