GEAR?s profit jumps 61.4% on higher coal sales volume, price

By Romel S. Gurky

SGX-listed coal mining and trading company Golden Energy and Resources Limited (GEAR) recorded net profit after tax of US$18.8 million for the quarter ended September 30, 2017 (3Q 2017), a 61.4 percent increase from $11.6 million achieved in the previous corresponding period (3Q 2016).

The company said in a statement on Monday that overall, the group turned in net profit of $67.4 million for the nine-month ended September 30, 2017 (9M 2017), which surpassed $33.7 million recorded in the full financial year ended 2016 (FY2016).

Strong performance from GEAR?s Coal Mining and Coal Trading Divisions bolstered overall revenue, which increased 83.7 percent to reach $179.3 million in 3Q 2017. ?The latest set of results marks four consecutive quarters of growth in the group?s top line and bottom line since its trading resumed on the Singapore Exchange (SGX) in December 2016,? GEAR said in the statement.

GEAR?s Coal Mining Division reported an increase in revenue from $87.1 million in 3Q 2016 to $154.8 million in 3Q 2017, mainly due to higher sales volume and higher weighted average selling price achieved in the period under review. Weighted average selling price increased from $33.08 per metric ton in 3Q 2016 to $41.41 per metric ton in 3Q 2017.

Revenue generated by the Group?s Coal Trading Division increased from $8.22 million in 3Q 2016 to $23.61 million in 3Q 2017, mainly due to higher weighted average selling price and an increase in sales volume.

The Others segment turned in a revenue of $0.9 million in 3Q 2017, compared to $2.3 million in the previous corresponding period, due to lower forestry income arising from lower log sales volume and a decrease in management fee income.

As at September 30, 2017, the Group?s balance sheet remains robust with a cash and cash equivalents position of $98.1 million and a low gearing ratio of 0.17 times.

To reward shareholders for their support, GEAR is declaring a second interim dividend of 0.21 Singapore cents, which brings year-to-date dividend payout to 1.01 Singapore cents.

Fuganto Widjaja, Executive Director and Group CEO of GEAR, said, ?GEAR?s year-on-year double-digit growth in its top line and bottom line for the latest financial quarter is highly encouraging. We are heartened by the consistency in GEAR?s performance since its trading resumed on the SGX and pleased to recommend yet another dividend payout to our shareholders within a short span of three months.?

?Operationally, we have achieved 10.1 million tons in coal production in the first nine months of 2017 and remain well on track to reach our Group production target of 14 million tons by the end of the year. In this regard, GEAR is pleased to announce that it has received approval from the Indonesian Government to raise coal production for BIB from 12 MT to 14.4 MT in 2017. GEAR intends to leverage its low coal production costs, its long life coal resources, and the versatility of its coal grade to drive growth. We believe that our Group?s low gearing ratio also helps position us to seize expansion opportunities in the marketplace as they present themselves,? Widjaja added.

GEAR said it continues to witness strong demand for coal both domestically and in its key export markets, China and India, which both recorded healthy gains in coal exports. Total coal imports in China rose 11 percent year-on-year to reach 27.08 MT in September 2017. In the same period, India?s total coal imports recorded a 9.5 percent increase to 18.33 MT driven in part by power plant fuel shortages.

This persisting buoyancy of the coal market has supported coal prices. FOB Kalimantan 4,200kcal/kg GAR thermal coal averaged US$45.00 per metric ton as at 30 September 2017, an increase of 7 percent month-on-month, it said.

?Looking ahead, the long-term outlook of the coal industry remains bright as the need for cheap electricity in Southeast Asia is expected to drive global demand for coal for power generation through 2040,? GEAR said.

GEAR has 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 and Central Kalimantan, Jambi (a province in Sumatra) and South Sumatra Basin.

Editing by Reiner Simanjuntak