Chapter 2

Financials and Estimates

Harita Nickel's three-year record reads well at the headline: revenue up 24% to Rp29.6tn and EPS up 54% to Rp142.02 across FY2023–FY2025, on a fortress balance sheet with net debt near Rp3.4tn. Beneath it, the source of profit is shifting. Operating margin has compressed from the ~43% of FY2021 to ~28%, and a rising share of pre-tax profit — 34% in FY2025 — now comes from associates the company does not consolidate and whose earnings it funds rather than collects in cash.

The three-year record

The last three years — the window this reader asked to see — show a business still growing volumes into a falling nickel price. Revenue rose each year, gross profit reached a record Rp9.7tn, and operating profit hit Rp8.4tn in FY2025 [1]. Earnings per share climbed from Rp92.39 to Rp142.02 [2].

Sources: FY2025 Consolidated Statement of Profit or Loss [3] and EPS attribution [4]; net debt derived from the Statement of Financial Position [5].

All figures Rp trillion except EPS (Rp per share). Source: FY2025 statements [6] [7]; FY2023 comparatives from the FY2024 statements [8] [9].

The growth is genuine, and it is volume-led: revenue rose while nickel prices fell, which means Harita sold more metal and ore. But the P&L already carries the tension this report is built around. Gross margin has held in a 31%–35% band, yet operating margin has stepped down and the bottom line increasingly depends on a line that sits below operating profit.

Margins have compressed; the net line has not

The two margins tell different stories. Operating margin fell from the low-40s in FY2021–FY2022 — when a smaller, mining-heavy Harita rode peak nickel prices — to roughly 28% in FY2025 as the downstream processing plants scaled and metal prices dropped [10]. Net margin did not follow it down; it rose to 37% in FY2025, held up by finance costs falling and by associate income roughly doubling.

Source: derived from reported financials, FY2021–FY2025 filings; FY2025 lines per the Statement of Profit or Loss [11]. Net margin is profit for the year over revenue.

The FY2022 net margin spike (48%) reflects large non-operating items in a transition year and is not a run-rate. The steadier signal is the FY2023–FY2025 path: an operating business whose margin has settled in the high-20s, with the reported profit line increasingly propped from below.

A third of pre-tax profit now comes from associates

This is where the financials become company-specific. Harita's share of profit from associates — equity-method income from smelter ventures it holds stakes in but does not consolidate — grew from Rp1.58tn in FY2023 to Rp4.09tn in FY2025, rising from 19% to 34% of pre-tax profit [12] [13]. In FY2025 that line grew 103% while operating profit grew 17%.

"Core" is pre-tax profit excluding the share of associate profit. Source: FY2025 [14] and FY2024 [15] Statements of Profit or Loss.

Two things matter for how a buyer should read the reported multiple. First, associate income is non-cash at the parent: it is Harita's share of the associates' accounting profit, not a dividend received. Second, rather than collecting cash from these ventures, Harita is feeding them — it invested Rp5.08tn of cash into associates in FY2025, up from Rp2.31tn a year earlier, and the carrying value of those stakes rose to Rp23.7tn, now 38% of total assets and nearly the size of its entire fixed-asset base [16] [17]. The FY2025 profit jump is real accounting profit; whether it is worth the same as consolidated cash earnings is the question a later chapter takes up. The counter-view is that the core still grew on its own — consolidated pre-tax profit ex-associates rose from Rp6.60tn to Rp8.06tn over the three years — so this is not a case of a hollow core dressed up by associates, but of a good core plus a fast-growing, cash-absorbing second engine.

A further slice of profit never reaches Harita's own shareholders. Non-controlling interests took Rp2.02tn of the Rp10.97tn FY2025 profit — about 18% — reflecting minority partners in consolidated subsidiaries [18]. Profit attributable to owners, Rp8.95tn, is the figure the EPS and any multiple are built on.

Cash is real, but most of it is exported

The cash statement confirms the operating business converts profit to cash well, then shows where that cash goes. Operating cash flow was Rp8.6tn in FY2025 against capex of only Rp0.58tn — the plants are largely built — for roughly Rp8.0tn of free cash flow before growth investment [19]. Almost all of it was then deployed: Rp5.08tn into associate stakes, Rp2.05tn in dividends to parent and subsidiary shareholders, and a net Rp1.7tn to repay bank debt [20] [21].

Source: FY2025 Consolidated Statement of Cash Flows [22] [23]. Dividends combine parent and subsidiary payments.

The takeaway is not that cash is weak — it is strong. It is that the free cash a value buyer might expect to see returned or banked is instead being recycled into growth that shows up as associate income, not consolidated revenue. Cash balances actually fell slightly over the year, to Rp6.0tn, despite the Rp8.6tn of operating inflow [24].

That deployment sits on a balance sheet built to absorb it. Equity of Rp46.8tn dwarfs total liabilities of Rp15.0tn, and bank debt of about Rp9.4tn against Rp6.0tn of cash leaves net debt near Rp3.4tn — under half a year of operating cash flow [25]. For a reader who wants the chance of insolvency close to zero, the leverage is not the worry; the fuller balance-sheet read sits in The Business.

What the estimates say — and what they don't

Forward coverage is where the public record thins. Harita is followed by about 13 analysts, all rating it Buy, with a mean 12-month target near Rp1,570 (range Rp1,200–Rp1,900) against a price of Rp825 — roughly 90% of implied upside, on consensus. Consensus longer-run growth is put at about 17% a year for earnings and 8% for revenue. But detailed multi-year annual estimate tables are not freely published for this name, so the forward picture below is assembled from the fragments that are, and should be read as indicative rather than precise.

Sources: FY2025 actual per the audited statements [26]; forward figures are broker estimates compiled from public sources (BRI Danareksa, Samuel Sekuritas, Simply Wall St / Investing.com consensus), not from the filings, and dispersion is wide.

The estimates carry a message worth stating plainly. Consensus net-profit forecasts of roughly Rp9.6tn–Rp10.7tn for FY2026 sit at or slightly below the Rp10.97tn Harita just earned, and revenue is expected to be broadly flat as the average selling price stays soft — Q1 2026 already showed revenue down 4% year on year even as net profit jumped 64%, again driven by higher associate income and a raised stake in the Obi Nickel Cobalt (ONC) venture. So the near-term forecasts do not, on their own, describe a company compounding earnings; they describe a flat-to-softer profit year on a weak nickel price. The gap between that and a target 90% above the current price is not closed by the FY2026 estimate — it rests on nickel-price recovery and the continued ramp of the associate ventures, the same two levers that make the reported numbers hard to read. What would change the read: annual consensus that shows consolidated (ex-associate) profit and cash growing, rather than the group total leaning further on equity-method income.