Adaro?s production decline 13% in Q3

By Puspita Maylana Devi

PT Adaro Energy Tbk announced that during Q3, the company?s production volume decreased 13% year-on-year to 10.87 million tons as some of customers did not take the option to buy more coal at the contracted price, as they had done in the past.

?Consequently, our sales volume also decreased 23% y-o-y to 10.99 million tons,? the company said in quarterly reported.

Due to more competition and less demand for the low rank coal, as well as the company?s policy to prioritize profit margin, the production volume of E4000 (Wara) decreased 38% q-o-q and 7% y-o-y to 1.29 million tons.

?However, we expect production volume of E4000 (Wara) will pick up as we have completed sales with delivery scheduled in 4Q12. Meanwhile, production volume of E5000 decreased slightly q-o-q and y-o-y due to less competition for this sub-bituminous medium heat value coal. All of our sales volume for 2012 has been contracted and priced based on fixed price and index-linked contracts. We continued to prioritize customer service and none of our coal shipments have been deferred.

Adaro Energy?s President Director, Garibaldi Thohir said, ?The market conditions remain challenging but our focus on operational excellence and our low cost business model allow us to weather these cycles and remain profitable. The long-term fundamental growth story of Indonesia and all of ASEAN remains intact and we will continue to build a great company to fuel the region?s energy needs. We need not to be distracted by short-term volatility but stay committed to our core operations and our goal of delivering value from Indonesian coal.?

Adaro said that its net revenue decreased 5.8% year over year (y-o-y) to US$2,755 million from US$2,925 million due to decreased sales volumes from difficult market conditions.

The EBITDA and net income also declined to US$909.8 million and US$346.5 million, respectively. Overall, margins contracted but our EBITDA margin remained healthy at 33.0%.

?During the current commodity down turn, we continue to focus on cost control, improving operational efficiencies and maintaining a strong balance sheet,? it said.

Editing by Adianto P. Simamora