Adaro reports lower earnings on lingering coal downturn
Saturday, May 2 2015 - 04:30 AM WIB
IDX-listed coal giant PT Adaro Energy Tbk reported weaker performance in the first quarter ending March of this year due to the lingering downturn in the global coal market.
The company said in a statement Thursday that net income dropped by 55 percent to US$59 million in the first three-month of this year compared to the corresponding period of last year, while operational EBITDA fell 32 percent due to lower prices and difficult market conditions.
?We booked 32 percent lower operational EBITDA at US$200 million in 1Q15 as we booked lower revenue. We continue to bolster our mining services and logistics business and move downstream from coal mining into power generation to expand our business model from pit to power,? Adaro said.
Net profit after tax decreased 55 percent to $59 million. Core earnings decreased 44 percent to $77 million. Core earnings exclude non-operational accounting items net of tax, which consisted of $18 million amortization of mining properties.
?Coal market conditions remained difficult in 1Q15 as prices remained under pressure due to persistent oversupply and lower demand growth from China. Our ASP (average selling price) was 14 percent lower in 1Q15 compared to the same period last year,? Adaro said.
Production from both PT Adaro Indonesia (AI) and Balangan Coal concessions through PT Semesta Centramas (SCM) decreased 6 percent to 13.2 million tons (Mt). Sales volume declined 3 percent to 13.4 Mt, which together with lower prices reduced revenue by 16 percent to $711 million. The sale of coal generated 93 percent of the company?s revenue, a slight decline from 2014.
?While we are anticipating the coal market conditions will continue to be challenging in 2015, we believe this is a cyclical downturn in which the long-term fundamentals for the coal and energy sectors remain strong. In this challenging coal price environment, we will continue to focus on capital preservation, cost efficiency and deleveraging,? Adaro Energy President Director and CEO Garibaldi Thohir said.
?Our strategy to build the non-coal mining part of our business has helped us to better withstand this prolonged downturn in the coal markets. The challenging conditions further encourage us to develop our non-coal mining businesses, and to boost their contributions to Adaro. We remain on track to create maximum value from Indonesian coal, including paying an annual cash dividend and to help build the nation,? he added.
| (US$ Million, except otherwise stated) | 1Q15 | 1Q14* | % Change |
| Net Revenue | 711 | 845 | -16% |
| Cost of Revenue | (545) | (598) | -9% |
| Gross Profit | 166 | 246 | -33% |
| Operating Income | 116 | 243 | -52% |
| Net Income | 59 | 132 | -55% |
| Core Earnings1 | 77 | 137 | -44% |
| Operational EBITDA2 | 200 | 294 | -32% |
| Total Assets | 6,367 | 6,856 | -7% |
| Total Liabilities | 3,050 | 3,546 | -14% |
| Stockholders' Equity | 3,317 | 3,310 | 0% |
| Interest Bearing Debt | 1,901 | 2,247 | -15% |
| Cash | 742 | 828 | -10% |
| Net Debt | 1,159 | 1,419 | -18% |
| Capital Expenditure3 | 22 | 26 | -15% |
| Free Cash Flow4 | 49 | 72 | -32% |
| Basic Earnings Per Share (EPS) in US$ | 0.00185 | 0.00403 | -54% |
| Coal cash cost (ex. royalty) in US$ | 28.15 | 29.83 | -6% |
| *As restated due to implementation of PSAK 24 (Revised 2013), ?Employee Benefits?. | |||
| ? | Units | 1Q15 | 1Q14 | 1Q15 vs. 1Q14 | 4Q14 | 1Q15 vs. 4Q14 |
| Coal Production | Mt | 13.16 | 13.99 | -6% | 14.45 | -9% |
| AI - Tutupan | Mt | 10.43 | 10.74 | -3% | 11.38 | -8% |
| AI - Paringin | Mt | 1.47 | 1.44 | 2% | 1.42 | 3% |
| AI ? Wara | Mt | 0.88 | 1.81 | -51% | 1.21 | -27% |
| Semesta Centramas (SCM) | Mt | 0.38 | - | - | 0.44 | -13% |
| Sales Volume | Mt | 13.44 | 13.85 | -3% | 14.64 | -8% |
| AI - E5000 | Mt | 3.49 | 4.54 | -23% | 4.73 | -26% |
| AI - E4700 / E4900 | Mt | 8.61 | 7.44 | 16% | 7.88 | 9% |
| AI - E4000 | Mt | 0.96 | 1.87 | -49% | 1.54 | -38% |
| Balangan Coal | Mt | 0.39 | - | - | 0.49 | -21% |
| Overburden Removal | Mbcm | 62.10 | 68.22 | -9% | 77.55 | -20% |
| AI | Mbcm | 60.53 | 68.22 | -11% | 75.82 | -20% |
| Semesta Centramas (SCM) | Mbcm | 1.57 | - | - | 1.73 | -9% |
Editing by Reiner Simanjuntak