Resources Prima reports 99.7% drop in net profit on weak coal price

By Romel S. Gurky

SGX-listed Resources Prima Group Limited, a coal mining company with integrated operations in Indonesia, reported net profit attributable to equity holders of the company dropped by 99.7 percent to US$17,000 for the six months ended June 30 of this year as compared to $6.7 million for the same first-half period of last year.

The company said in a statement Friday that for the three months ended June 30, 2016, the group reported a net loss attributable to equity holders of the company of $0.7 million as compared to a net profit of $1.6 million in the corresponding period a year ago. ?The group?s earnings in 6MFYE12/16 and 2QFYE12/16 were mainly impacted by lower gross profit margins and weaker coal sales revenue as a result of a lower average selling price of coal,? the statement said.

Executive Chairman and Chief Executive Officer, Agus Sugiono said, ?Our earnings during the first half were mainly impacted by weak coal sales prices. Further, our ability to ramp up production volume was hindered by the delay in getting the second borrow-use permit (IPPKH2). Nonetheless, I believe the outlook for our company is improving, especially in light of securing IPPKH2 in July 2016. I am also glad to see the gradual improvement of coal prices in the past two months. Since hitting a multi-year low of $50.92 in February 2016, the Indonesia Coal Reference Price (HBA) has rebounded to above $58.00 in August 2016, a six month high.?

?In the near term, we will continue to focus on managing our cash-flows, operating costs and stripping ratios as well as to intensify our efforts to commence coal production from IPPKH2 in the current quarter ending September 30, 2016.?

In 6MFYE12/16, revenue for the group decreased by 17.0 percent to $30.7 million from $37.0 million in 6MFYE15 as a result of lower coal sales revenue and lower facility usage income. Revenue from coal sales decreased by 14.6 percent to $30.6 million in 6MFYE12/16 from $35.9 million in 6MFYE15 due to lower average coal sales price. In 6MFYE12/16, coal sales volume increased by 9.3 percent to 814,473 tons from 745,368 tons in 6MFYE15, while the average coal sales price decreased by 21.7 percent to $37.2/MT from $47.5/MT over the same period. In 6MFYE16, facility usage income decreased by 92.7 percent to $80,000 million due to lower throughput of coal from a third party mine owner.

The group?s gross profit in 6MFYE12/16 decreased by 46.2 percent to $5.6 million from $10.4 million in 6MFYE15 mainly due to the decrease in group revenue. In 6MFYE12/16, the group?s gross profit margin decreased to 18.2 percent from 28.0 percent in 6MFYE15 largely due to lower average sales price of coal.

Cost of goods sold for 6MFYE12/16 comprised mainly waste mining costs, which accounted for 51.0 percent of the total cost of goods sold. The other main costs included coal hauling costs as well as depreciation and amortisation. Cost of goods sold in 6MFYE12/16 decreased 5.6 percent to $25.1 million from $26.6 million in 6MFYE15 mainly attributable to lower coal production volume which in turn resulted in decreases in waste mining costs, coal hauling costs and fuel. These lower costs were partly offset by increases in other costs and staff costs. The costs of goods sold per tonne decreased by 0.9 percent to $32.9 per ton in 6MFYE12/16 from $33.2 per ton in 6MFYE15.

In 6MFYE12/16, net cash generated from operating activities amounted to $1.5 million. Net cash used in investing activities of $1.3 million was mainly used to secure licences and permits of IPPKH2. Net cash used in financing activities of $1.8 million for 6MFYE12/16 was mainly in relation to the repayment of loans from related and third parties and finance leases.

The group?s cash and cash equivalents as at June 30, 2016 was $3.2 million compared to $4.7 million as at December 31, 2015, the company statement ended.

Editing by Reiner Simanjuntak