SMM Plans 76B Yen Capex in F2010, Mainly for Ni Expansion

Sumitomo Metal Mining (SMM) announced on Tuesday the firm increases annual capital investment by 34% to 75.8 billion yen for fiscal 2010 ending in March 2011 compared with fiscal 2009. Capital expenditure for the smelting & refining business field will triple to 57.6 billion yen. For fiscal 2010, SMM estimates the consolidated recurring profit increases by 9.4% to 96 billion yen and the revenue increases by 2% to 740 billion yen compared with fiscal 2009. The firm expects for steady demand in the metal resources business unit and the smelting & refining business unit and the sales recovery in the materials business unit. At the same time, base metal market prices are forecasted to keep the level as high as in fiscal 2009.

In fiscal 2010, SMM plans capital expenditure of 45 billion yen for construction of Taganito nickel project in the Philippines. In Japan, the firm invests 2.5 billion yen to renovate No.3 electric furnace in Hyuga Smelting, a productive base of ferronickel, and 0.9 billion yen to expand electrolytic nickel production to 65,000 tonnes per year. For the materials business unit, SMM will invest 7.9 billion yen, in which 1.7 billion yen will be applied to launch sapphire strengthening operations. Capex for the materials business unit increases by 88% from fiscal 2009.

SMM estimates the consolidated operating profit of 79 billion yen for fiscal 2010, up by 19.2% from fiscal 2009, with the net profit of 67 billion yen. Profits would improve for all of the 3 business units. Estimated recurring profit of 96 billion yen is the fourthly highest record for SMM, in which 21 billion yen stands for the equity method income. The equity method income is forecasted to decrease by 5 billion yen compared with fiscal 2009 due to depreciation for Goro project.

SMM posted the consolidated recurring profit of 87.8 billion yen in fiscal 2009, 2.7 times of the previous fiscal year. The net sales lowered by 8.6% to 725.8 billion yen due to price down of copper and nickel. Meanwhile, Pogo gold mine and Coral Bay nickel project contributed to the profit growth. Other positive factors were cost cut efforts in the materials business unit and upturn of base metal market prices.