Expansion plans will lower dividends: Timah

Posted on May 1, 2012


Raras Cahyafitri, The Jakarta Post, Jakarta | Thu, 04/12/2012 11:14 AM

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Wachid Usman: PT. Timah President Director. (JP/R. Berto Wedhatama)Wachid Usman: PT. Timah President Director. (JP/R. Berto Wedhatama)

Publicly listed tin producer PT Timah says it will book a lower dividend pay-out ratio this year as it plans to retain profits for investment.

“From year to year, we pay dividends at 50 percent of our profits. This year, we’re proposing 30 percent, and hope that the ratio approved won’t be more than 40 percent,” Timah president director Wachid Usman said on Wednesday.

The proposal will be submitted to Timah’s annual general shareholders meeting on April 19.

Timah booked Rp 896.78 billion (US$97 million) in net profits in 2011, down 5.39 percent from Rp 947.94 billion in 2010.

The company paid out Rp 473.96 billion in dividends in 2011 for profits reaped in 2010.

Wachid said Timah needed Rp 1.4 trillion for investment this year, down from an estimated Rp 1.8 trillion to Rp 2 trillion in an earlier plan.

“We have postponed several investments because the conditions are not favorable,” Wachid said.

Among the projects to be postponed is the development of a non-tin mining mineral and asphalt extraction project.

The firm’s ongoing investments include the procurement of bucket wheel dredgers, the modification of bucker ladder dredgers and upgrading the quality of its existing processing and smelting facilities.

Wachid said that the company would use internal cash and bank facilities to support its investment plans. “There are stand-by lenders, including Bank Mandiri and Bank BRI.”

Wachid said that Timah’s performance in the first quarter of 2012 was better compared to the same period last year.

“Tin production levels have not been flat in a year. In the first quarter, there will be influences such as from bad weather, rainfalls and [New Year’s] holidays. Production will be higher in the second and third quarter, and will decline again in the fourth quarter,” he said.

Wachid said that Timah’s production in the first quarter of 2012 might have reached 20 to 22 percent of the company’s full year target. Timah produced 38,132 metric tons of tin last year.

He predicted that tin prices would be higher this year.

The company sold refined tin for $26,714 per metric ton on average last year. The price of refined tin fluctuated between $18,610 and $33,255 last year, according to Timah’s financial statement for 2011.

“Since the launching of Indonesian Tin Market [INATIN], the price has fluctuated between $24,000 and $25,000 per metric ton in February. At this moment, the price stands at around $23,000. The decline was because several sellers stocked tin. The price will likely go higher, because tin stocks have yet to reach their normal levels,” Wachid said.

The Indonesian Commodities and Derivatives Exchange (ICDX) officially launched INATIN in December as an international market platform for physical tin purchasing contracts.

Inatin is expected to serve as an alternative to the London Metal Exchange for setting a benchmark price for the commodity.

Nine companies have joined INATIN. They are publicly listed PT Timah, 3H CO, Gold Matrix Resources Pte. Ltd., Purple Products Pvt. Ltd., PT Tambang Timah, PT Mitra Stania Prima, PT Comexindo International, PT Timah Industri and PT Refined Bangka Tin.