GEAR?s net profit jumps almost 14-times on stronger coal price

By Romel S. Gurky

Petromindo

SGX-listed Golden Energy and Resources Limited (GEAR) said that net profit in the first quarter of this year surged by 13.5-times to US$29.6 million from $2.2 million in the corresponding period of last year, thanks to stronger coal price.

The company said in a statement on Monday that profit attributable to owners of the company in the quarter ending March of this year reached $19.0 million, a 10.3-times increase from a profit attributable to owners of the company of $1.7 million in the year ago period.

GEAR, which among others is engaged in coal mining business through its 67 percent-owned Indonesian subsidiary IDX-listed PT Golden Energy Mines Tbk, booked a revenue of $143.2 million in the first quarter of this year, an increase of 47.9 percent compared to a revenue of $96.8 million for the same period of last year. Correspondingly, the group?s gross profit grew 182.5 percent to $72.1 million from $25.5 million.

GEAR said the first quarter net profit of $29.6 million had nearly matched the full-year results where GEAR swung back to a record net profit of $33.7 million in the financial year ended December 31, 2016 (1Q2016).

In the period under review, GEAR?s finance cost was halved from $4.5 million in 1Q2016 to $2.2 million, as a result of loan settlements in December 2016. The group ended the quarter with a healthy cash position of $103.8 million, the statement said.

?The surge in GEAR?s profitability in 1Q2017 was driven by its Coal Mining Division, which reported a doubling in revenue,? the company said. ?This was underpinned by an increase in the average realized selling price of the Group?s coal from $31.53 per metric ton in 1Q2016 to $40.86 per metric ton in 1Q2017.?

Fuganto Widjaja, Executive Director and Group CEO of GEAR, said, ?The Group anticipates that the outlook for coal will continue to be positive, given an expectation of a supply shortfall, arising from strong demand for thermal coal.?

?Industrialization and electrification in Asian economies are expected to drive coal demand in both the domestic and export markets. Backed by a healthy net cash position and increased production from our coal mines, GEAR is primed to capitalize on strategic acquisition opportunities should these arise,? Widjaja added.

Elsewhere, GEAR said it has sought approval from the Indonesian Government to raise Borneo Indo Bara coal production output to 12 million tons per annum for 2017. With the Group?s ramp-up in coal production by 50 percent from 2.0 million tons in 1Q2016 to 3.0 million tons from its BIB and KIM concessions in 1Q2017, GEAR said it is optimistic in its ability to obtain the approval, which will place it on track in achieving its target coal production volume of 14 million tons for FY2017.

The group is principally engaged in the exploration, mining, and marketing of thermal coal sourced from its coal mining concession areas, covering an aggregate of approximately 42,904 hectares in South Kalimantan, Central Kalimantan, Jambi (a province in Sumatra) and South Sumatra.

Editing by Reiner Simanjuntak