Bumi estimates 2016 net income at $101.6m, bright prospects for 2017

Courtesy of Arutmin

IDX-listed coal giant PT Bumi Resources Tbk said that 2016 net income is estimated at US$101.6 million compared with a net loss of more than $2 billion in the previous year.

The company said in a statement on Wednesday that its full-year 2016 financials are still in the process of audit, hoping to publish them next month.

?In response to requests from stakeholders it indicates that its present best estimate of net income for FY?16 is $101.6 million (compared with a net loss > $2 billion in FY?15),? Bumi said in the statement.

The company said that coal production and volume increased last year. Although its average selling price was lower, it managed to reduce production costs.

Bumi said that combined coal sales in 2016 increased by about 10.6 percent to 87.7 million tons compared with 79.3 million tons in the previous year.

Sales from subsidiary PT Arutmin increased by 15.3 percent to 28.6 million tons last year compared with 24.8 million tons in the previous year. Another subsidiary PT Kaltim Prima Coal (KPC), likewise, increased sales by 8.4 percent to 59.1 million tons compared with 54.6 million tons.

In terms of quarter on quarter operating performance, Bumi said combined coal sales increased by 10.2 percent to 23.1 million tons in the fourth quarter of 2016 (Q4?16) compared with 20.9 million tons in Q4?15.

Arutmin sales increased by 35.5 percent to 8.4 million tons in Q4?16 compared with 6.2 million tons in Q4.15. KPC sales were steady at 14.7 million tons in Q4?16.

The company increased coal mined by 6.5 percent to 86.5 million tons in last year (FY?16) compared with 81.2 million tons in FY?15.

The company increased coal mined by 12.3 percent to 23.8 million tons in Q4?16 compared with 21.2 million tons in Q4?15. Arutmin increased coal mined by 37.2 percent to 9.0 million tons in Q4?16 compared with 6.5 million tons in Q4?15. KPC increased coal mined by 1.2 percent to 14.9 million tons in Q4?16 compared with 14.7 million tons in Q4?15.

Bumi said the combined strip ratio was reduced by 3.7 percent to 6.9 in FY?16 compared with 7.1 in FY?15 due to a reduction by 4.1 percent in KPC.

The average price realized in FY?16 was $42.1/ton compared with $44.8/ton in FY?15 or a reduction by 6.0 percent, due to market conditions and execution of previous contracts, Bumi said

The company, however, said that the average selling price (ASP) shows an upward trend in Q4?16 to $47.7/ton compared with $42.1/ton in Q4?15 and $40.5/ton in Q3?16.

Bumi said production cash cost has sharply reduced to $27.0/ton coal mined in FY?16 (compared with $34.6/ton in 2014 and $30.2/ton in 2015) ? or by $7.6/ton coal mined since December 2014 ? a significant reduction ? due to fuel and spare procurement efficiencies, lower mining operating costs, and higher production rate at an Arutmin mine.

Bumi said outlook for coal price in 2017 is optimistic and benchmark Coal Price presently is around $80/ton. The company expects to exceed production between 5-7 percent and its average selling price at least 30% above FY?16 levels.

The company said 60 percent of sales volume is already committed and this is expected to rise to 75 percent at end of Q1?17 with finalization of annual contracts with Japan.

Bumi said that its net income prospects for 2017 are bright as sales are expected to be 5-7 percent higher than last year?s, coal price is projected to be higher at least 30 percent than last year, and increasing efficiencies and economies of scale.

Editing by Reiner Simanjuntak