Toba Bara?s profit down 27% to $25.7m in 2015

By Romel S. gurky

IDX-listed coal mining firm PT Toba Bara Sejahtera announced on Tuesday that it booked US$25.7 million in profit (before minority interest), down 27.6 percent year on year (y-o-y), after taking into account finance cost of $4.6 million and tax expense of $13. 4 million

The company booked sales of US$ 348.7million in 2015, 30.3 percent lower compared to 2014, as a result of lower sales volume and weaker NEWCIndex price. However, margins such as gross profit margin, EBITDA margin, and operating profit margin improved over the same period due to continuous operational improvements and cost management disciplines.

A 32.8 percent decrease in cost of goods sold from US$ 413.8 million in 2014 to $278.1million in 2015 resulted mainly from contraction in FOB cash cost, slipping by 17.7 percent y-o-y from $51.3 per ton to $42.2 per ton in 2015. This stemmed from a combination of cost management initiatives and better execution of mine plan. FOB cash cost is derived from cost of goods sold plus marketing and selling expenses and subtracting depreciation and amortization. Based on the mine plan, the 2015 production was set at 6.1 million tons or 24.7 percent lower compared to that in 2014. Sales volume 6.4 million ton or 19.0 percent lower compared 2014

EBITDA margin solidly increased from 13.4 percent in 2014 to 15.4 percent in 2015 and EBITDA per ton stabilized from $ 8.5 to $8. 4 y-o-y despite a 19.9 percent contraction in EBITDA from $67. 0 million in 2014. This was attributable to predominantly better mine plan execution and cost management initiatives including lowering mining cost during a challenging period.

The company currently has four operating subsidiaries, three in coal mining namely PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM), PT Trisensa Mineral Utama (TMU) located in East Kalimantan.

In the fourth quarter (4Q) of 2015, the company?s production volume of 1.5 million tons came in line with its 2015 quarterly guidance of between 1.5 ?2.0 million tons. Such production volume resulted from operations of all three operating subsidiaries with the following respective contributions: ~1.0million tons from ABN, ~0.3million tons from IM, and ~0.2million tons from TMU.

To date, ABN remained as the main contributor to the company?s total production volume, while all three subsidiaries achieved their respective quarterly production volume targets consecutively over the last four quarters.

Y-o-y stripping ratio (SR) declined by 7.5 percent to 12.3x in 2015 from 13.3x in 2014 due to continued efforts in improving operational performance amidst the low coal price environment, while complying with disciplined mine plan execution.

ASP only contracted by 14.0 percent y-o-y from $ 63.7 per ton in 2014 to $ 54.8 per ton in 2015, which compared favorably with NEWC Index price that fell 16.4 percent y-o-y over the same period. To date, the ASP outperformance over the NEWC Index price has so far materialized for three consecutive years in 2013, 2014, and 2015. The company capitalized on the market momentum during the latter parts of 2013, 2014, and 2015 by selling forward to its quality buyers the majority portion of its sales volume predominantly based on fixed pricing. This marketing initiative has enabled the Company to maximize its pricing strategy given the adverse coal market condition.

Editing by Johannes Simbolon