Resources Prima swings to profit
Saturday, November 14 2015 - 04:05 AM WIB
The company said in a statement Friday that for the 6-month period ended September 30, 2015 (1H2016), the group reported a net profit of $3.1 million as compared to a net loss of $6.3 million in the corresponding period a year ago (1H2015). The improvement in the bottom-line for 2Q2016 and 1H2016 was primarily due to a reduction in cost of goods sold leading to a sharp improvement in gross profit margins for the group.
Commenting on the results, Executive Chairman and Chief Executive Officer, Agus Sugiono said, ?Although the near term outlook for the coal industry remains challenging, I remain optimistic about the long term prospects for the industry as I believe coal will continue to be one of the most efficient and low cost fuels for electricity generation especially in Asia.?
?Despite the ongoing weakness in coal sales prices during the first half of the financial year, we continued to execute operational efficiencies by focusing on cost discipline. This has enabled us to lower our cost of goods sold per ton by approximately 33.6 percent and this, in turn, improved our gross profit and gross profit margin in 1H2016. I am also pleased to update that since August 2015, we have started to enjoy the lower waste mining rate due to a cost reduction of $0.31/bcm following commencement of blasting.?
Going forward, the company said it will continue to proactively manage costs and cost structure by engaging in further discussions with our mining contractors and vendors.
Revenue for the group in 1H2016 decreased by 23.6 percent to $35.0 million from $45.9 million in 1H2015, primarily due to lower coal sales and lower coal sales prices. For similar reasons, in 1H2016 coal sales decreased by 24.1 percent to $33.9 million from $44.7 million in 1H2015. In 1H2016, coal sales volume decreased by 12.3 percent to approximately 0.77 million tons from approximately 0.87 million tons in 1H2015, while the average coal sales price decreased by 13.5 percent to $44.3/MT in 1H2016 from $51.2/MT in 1H2015. In 1H2016, facilities usage income decreased marginally by 4.8 percent to $1.1 million due to lower throughput of coal from a third party mine owner.
In 2Q2016, the group?s revenue fell by 30.1 percent to $16.4 million from $23.5 million in 2Q2015, which was largely a result of a 31.7 percent decline in coal sales to $15.8 million in 2Q2016 from $23.2 million in 2Q2015. In 2Q2016, coal sales volume decreased by 21.2 percent to approximately 0.36 million tons from approximately 0.46 million tons in 2Q2015 while the average coal sales price decreased by 13.3 percent to $43.5/MT in 2Q2016 from $50.2/MT in 2Q2015.
?The reduction in coal sales volume resulted from both a strategic slowing of production as a result of depressed coal prices and planned major maintenance performed on the conveyor system during 2Q2016,? the company said.
The group?s gross profit improved significantly in 1H2016 to $8.2 million from a gross loss of $0.4 million in 1H2015. In 2Q2016, the group?s gross profit also improved to $3.3 million from a gross loss of $1.1 million in 2Q2015. The improvement in gross profits for 2Q2016 and 1H2016 was primarily due to a reduction in costs of goods sold resulting in better gross profit margins for the group.
In 1H2016, the group?s gross profit margin improved significantly to 23.3 percent from -0.8 percent in 1H2015 while the group?s gross profit margin in 2Q2016 improved to 20.2 percent from -4.6% in 2Q2015. The improvement in gross profit margins for the Group was primarily due to a lower unit cost of goods sold arising from (i) a decrease in waste mining costs; (ii) reduced heavy equipment rental costs; and (iii) lower depreciation and amortization as a result of deferred stripping cost being fully amortized in November 2014. The unit cost of goods sold decreased by 33.6 percent to $35.1 in 1H2016 and fell by 32.5 percent to $36.0 in 2Q2016. These cost reductions were achieved despite an increase in average stripping ratio to 9.2 bank cubic metres of overburden per MT (bcm/MT) from 7.7 bcm/MT in 2Q2016.
In 1H2016, the group generated cash from operating profit before working capital of $7.7 million. The cash generated was used for the group?s working capital purposes, primarily for payment to vendors. As a result, net cash generated from operating activities amounted to $3.5 million in 1H2016. Net cash used in investing activities of $7.9 million in 1H2016 was primarily for the purchase of land to increase the capacity of the stockpile facility and additional coal hauling trucks, partially offset by proceeds from disposal of available-for-sale investment. Net cash used in financing activities of $0.5 million was in relation to finance lease repayments. The group?s cash and cash equivalents as at September 30, 2015 increased to $0.6 million as compared to $0.1 million as at September 30, 2014.
Editing by Reiner Simanjuntak