Bumi Resources may post 80% increase in full-year profit
Wednesday, March 15 2006 - 02:31 AM WIB
Bumi probably earned RP 2.19 trillion (US$237 million) in the year ended Dec. 31, according to the median of five analysts in a Thomson Financial survey. Rival coal miner PT Tambang Batubara Bukit Asam may say profit rose 8.6 percent.
Their profits may rise to records in 2006, analysts say.
Coal miners in Indonesia , which overtook Australia as the world?s biggest exporter of thermal coal used in power stations last year, are benefiting as economic growth in China boosts demand for coal to power electricity generation.
?Demand is very strong for all sectors in mining,? Cholis Baidowi, whose $11-million TRIM Kapital is Indonesia?s best-performing stock fund over the past 12 months , said by telephone March 13.
?The reason I buy the coal mining sector is because electricity demand for Indonesia is rising.?
Bumi shares fell 5 percent in 2005, compared with the 16 percent gain in the benchmark Jakarta Composite Index. They have risen 22 percent since the year began closing Tuesday at Rp 930.
The company?s profit growth curbed by increases in the costs of fuel, labor and raw materials, analysts said. The price of Tapis crude, the benchmark oil price in Southeast Asia, rose 57 percent in 2005. It was $65.11 a barrel Monday, according to Bloomberg data.
Bumi?s earnings may rise another 12 percent to Rp 2.46 trillion in 2006, according to the mediun of 5 recent forecasts by Thomson Financial. Profit at Bukit Asam may hit Rp 456 billion in the year ended Dec. 31, before rising 28 percent to Rp 585 billion in 2006, the survey shows.
Both will report their 2005 results by the end of this month.
?Every company in Indonesia has suffered from the subsidy cuts ? in fuel, Baidowi said.
Fuel?s share of productions costs at Bumi may rise to 24 percent in 2006 from 13 percent in 2005, Peter Tabalujan, head of investor relations, said March 3.
?We have plans over the medium-term and long-term to reduce costs , for example by using more conveyor belts to move the ore,? Tabalujan said. ?We should see an increase in costs this year for sure because of the fuel price hike.?
Demand for thermal coal has been rising on supply constraints and demand from China, which has reduced exports. Chinese thermal coal imports rose by 28 percent year-on-year
In January, the Beijing-based Customs General Administration said Feb. 28.
Thermal coal for immediate delivery from New Castle in Australia rose A$1.16 (85 U.S. cents) to A$48.87 a metric ton in the week ended March 3, according to the globalCOAL NEWC Index. Prices have gained 36 percent since mid-November.
Merrill Lynch & Co, the world?s biggest securities firm by market value, March 1 raised its forecasts for thermal coal and nickel because of rising demand, lifting its prediction for annual average thermal coal prices to $48 a ton, from $43 a ton.
Indonesian miners? production costs surged in 2005 after the government started to abandon its decades-old-policy of subsidizing crude oil.
After most subsidies ended in October, inflation soared to a six-year high in November.
PT International Nickel, the first Indonesian miner to report 2005 earnings, said Feb. 15 that higher costs helped dent fourth-quarter profit.
The unit of Inco Ltd., the world?s second-largest nickel miner, earned 11 percent less even as sales rose 22 percent.
Earnings at PT Aneka Tambang, which mainly mines nickel and gold, may rise 10 percent in 2005 to Rp 893 billion. It is scheduled to report earnings by March 16. It could earn Rp 1.19 trillion in 2006, 33 percent more than 2005, according to the median of five analysts at Thomson Financial. (*)