Toba Bara reports stronger profit on higher coal price
Thursday, May 4 2017 - 12:57 AM WIB
IDX-listed coal mining firm PT Toba Bara Sejahtra Tbk enjoyed a much stronger profit in the first quarter of this year thanks to higher coal price and lower cost.
The company said in a statement on Wednesday that total profit in the January-March period of this year jumped by 96.2 percent to US$10.2 million compared to the same period of last year.
The higher profit was made despite slower coal production during the first quarter of this year (1Q17). The company saw production volume of 1.1 million tons in 1Q17, down by 26.67 percent from 1.5 million tons in the same period of last year.
The coal production was generated by all three subsidiaries of PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM) and PT Trisensa Mineral Utama (TMU), contributing 0.7 million tons, 0.1 million tons, and 0.3 million tons respectively. ABN remained the largest contributor to the company?s overall production volume, accounting for 61.8 percent of total 1Q17 production followed by TMU and IM at 28.1 percent and 10.1 percent, respectively.
?The company?s annual production guidance for 2017 is estimated at 5 - 6 million tons,? Toba Bara said in the statement.
The company said that such production number of 1.1 million tons came in below the quarterly production guidance of between 1.25 -1.50 million tons and at higher than expected stripping ratio (SR) number. ?This was primarily due to the relatively strong seasonal wet weather conditions impacting the operational activity during the first quarter period,? it said.
Average selling price (ASP) rose by 22.2 percent y-o-y from $46.8 per ton in 1Q16 to $57.2 per ton in 1Q17, while NEWC Index price rose higher by 62.0 percent y-o-y over the same period. The company?s marketing initiative of securing 2017 sales volume contracts with customers mainly during the second semester of 2016 with majority at fixed price enabled it to fetch relatively higher ASP in 1Q17 compared to in 1Q16 as the benchmark NEWC Index price rose significantly in second semester 2016 relative to the first semester 2016.
In 1Q16, the company predominantly sold its coal to South Korea, Thailand, Malaysia, and India. As a percentage of total customer base, the compositions of end-users and traders in 1Q16 were recorded at 14.2 percent and 85.8 percent respectively compared to 30.0 percent and 70.0 percent respectively in 1Q16.
Toba Bara said the lower percentage of end users was because higher committed sales to end-users would be expected to be realized post 1Q17. Moreover, end-user composition for 2017 is also expected to surpass that of 2016. Major international traders and notable end-users such as major regional power generation companies account for the company?s main dedicated customers.
Meanwhile, around 29.6 percent of total sales volume by product was contributed by the 5600 GAR calorific value (CV), 18.4 percent by the higher 5800 GAR and 5900 GAR LS, and 52.0% by the lower 4800 -5200 GAR coal qualities.
Toba Bara said it recorded sales of $62.7 million in 1Q17, or slightly lower by 1.4 percent compared to that in 1Q16 as a result of much stronger ASP despite lower sales volume. Such stronger ASP, in turn, directly boosted the much stronger financial margins over the period.
Cost of goods sold slipped by 13.6 percent y-o-y, resulting from stable overall cost management as well as prudent execution of mine plan and lower production volume. The increase in SR in 1Q17 compared to in 1Q16 was attributable to higher than expected wet weather conditions, while resulted in the slightly higher FOB cash cost over the period.
A 51.3 percent y-o-y increase in EBITDA to $17.1 million in 1Q17 from $11.3 million in 1Q16 significantly improved EBITDA margin from 17.8 percent to 27.3 percent over the period. This mainly stemmed from the higher recorded ASP secured during the second semester 2016, which was commensurate to the higher international coal price over the period as compared to that in the first semester 2016.
As the company demonstrated stable margins in 2016, gross profit margin, EBITDA margin, and operating margin rose y-o-y from 22.5 percent in 1Q16 to 32.1 percent in 1Q17, from 17.8 percent in 1Q16 to 27.3 percent in 1Q17, and from 13.1 percent in 1Q16 to 23.8 percent in 1Q17 respectively. ?This was attributable due to combination of higher ASP and relatively well maintained cost management efforts as well as mine plan execution,? Toba Bara said.
Editing by Reiner Simanjuntak