Resources Prima net profit jumps 65.9%

By Romel S. Gurky

Courtesy of Resources Prima

SGX-listed Resources Prima Group Limited, which operates integrated coal mining operations including mining facilities in Indonesia?s East Kalimantan Province, reported a 65.9 percent jump in net profit attributed to equity holders in the first quarter of this year compared to the same period of last year on sharp improvement in its coal price and higher facility usage income.

The company said in a statement Friday that net profit attributable to equity holders in first quarter ending March of this year surged to US$1.1 million from $0.7 million in the same period last year (1QFY2016) as a result of the sharp improvement in average selling price of coal as well as higher facility usage income.

?Despite lower coal production and lower coal sales quantities as a result of the heavier than normal rainfall in recent months, the group was able to report a strong improvement in our profitability,? said Executive Chairman and CEO Agus Sugiono in the statement.

?We are benefitting from the recovery in the coal industry globally and within Indonesia, which led to an improvement in our coal sales price as well as a rebound in facility usage income from a third party mine owner,? he added.

Agus said the near term outlook of the coal industry in Indonesia remains positive as evidenced by the upward movement of the domestic coal reference price. The government coal reference price HBA has shown sustained recovery over the past 12 months, having rebounded 58.7 percent from $51.62 per ton in March 2016 to $81.90 per ton in March 2017.

Elsewhere, the statement said revenue for the proup in 1QFY2017 decreased by 23.4 percent to $14.3 million from $18.7 million in 1QFY2016, primarily due to lower coal sales revenue partially offset by higher facility usage income. Coal sales revenue in 1QFY2017 decreased by 24.5 percent to $14.0 million from $18.6 million in 1QFY2016 as a result of lower coal sales quantities. Coal sales quantities fell by 54.8 percent to 221,272 tons in 1QFY2017 from 489,374 tons in 1QFY2016 as coal production was adversely affected by the heavier than normal rainfall.

The decrease in coal sales was partially offset by an increase in average sales price of coal, which surged 68.1 percent to $63.2 per ton in 1QFY2017 from $37.6 per ton in 1QFY2016. Additionally, as a result of higher throughput of coal from a third party mine owner, facility usage income for the Group rebounded to $281,000 in 1QFY2017 from $80,000 in 1QFY2016.

The group?s gross profit in 1QFY2017 increased by 7.6 percent to $4.7 million from $4.3 million in 1QFY2016 as the decrease in cost of goods sold (COGS) was greater than the decrease in group revenue, resulting in a higher gross profit margin for the group. In 1QFY2017, the group?s gross profit margin improved to 32.6 percent from 23.2 percent in 1QFY2016 mainly due to the higher average sales price of coal.

In 1QFY2017, COGS decreased by 32.7 percent to $9.6 million from $14.3 million in 1QFY2016 due to a decrease in coal sales quantity. The decrease in COGS was mainly attributable to decreases in waste mining costs, coal hauling costs and other costs. Despite the decrease in COGS, COGS per ton increased by 24.9 percent to $39.6 per ton in 1QFY2017 from $31.7 per ton in 1QFY2016 mainly due to a higher waste mining rate, increase in stripping ratio and higher fixed costs per tonne due to lower coal production.

Waste mining costs, which is the single largest component and accounted for 57.3 percent of COGS in 1QFY2017, decreased by 27.5 percent to $5.5 million from $7.6 million in 1QFY2016. The other main costs included coal hauling costs as well as depreciation and amortisation, which in total accounted for 6.5 percent and 15.3 percent respectively of the total COGS in 1QFY2017.

In 1QFY2017, net cash generated from operating activities amounted to $1.0 million. Net cash used in investing activities of $0.2 million was primarily used for IPPKH2. Net cash used in financing activities of $0.2 million for 1QFY2017 was mainly in relation to the repayment of finance leases. The group?s cash and cash equivalents as at 31 March 2017 increased to $3.0 million from $2.3 million as at 31 December 2016.

As at 31 March 2017 the group recorded negative working capital of $10.6 million an improvement of US$2.4 million from the balance at 31 December 2016.

?Looking ahead, we will continue to focus on managing our cash-flows, operating costs, stripping ratios and to increase production from IPPKH2-West Block in order to improve our financial performance in 2017,? Agus said.

Editing by Reiner Simanjuntak