State tin mining firm PT Timah, the world’s largest, expects a 19 percent slump in full-year revenue from a year earlier as oversupply negatively affects global prices.
“Revenue will be smaller compared to last year because the price of tin is estimated to remain relatively low until the end of this year,” finance director Krishna Syarif told a media conference on the firm’s performance Thursday.
It has been reported that Timah has sold its current production output at a price of US$12,000 per ton.
Khrisna said this year the company is predicted to earn Rp 7.6 trillion ($ 798 million) in total revenue, which would be lower than Rp 9.05 trillion in a previous year. Consequently, net profits are estimated to fall to Rp 350 billion from Rp 1.34 trillion. But the fall in profits is in greater proportion than the fall in gross revenue.
According to Khrisna, in 2009 the price of tin at the London metal exchange (LME) has currently averaged $13.061 per ton. In 2008, the price averaged $21,900 per ton.
“The supply will still exceed [demand] until the year-end, so the price would be even lower,” he said.
Observers have predicted that the price of tin would average about $15.800 per ton next year, representing some degree of price recovery.
Until September, Timah booked Rp 5.53 trillion in total revenue from Rp 6.89 trillion in the same period of last year.
However, as of September the company’s production rose to 36,453 tons from 34,045 tons in the same period of last year.
“We are consistent in providing tin to our customers. We simply face external problems such as low prices,” Khrisna said of the slump in gross revenue and net profits.
This year, the company targets to produce 50,000 tons, up slightly from 48,000 tons in 2008.
Next year, Timah expects the price of tin to be reasonably stable at around $14,500-$15,000 per ton.
“We plan to produce about 49,000 tons and to concentrate on offshore exploration,” Krishna said, adding that out of 49,000 tons of production targeted, 23,000 tons would be derived from offshore.
“We will take some loans from banks for capital expenditure next year, because currently we just have around Rp 300 billion in cash,” he said, while refusing to disclose specific figures for proposed capital expenditure.
Timah had planned to spend Rp 1.4 trillion in capital expenditure for this year, but later on it cut the figure right back to Rp 484 billion.
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