Toba Bara?s profit down on lower price, sales volume
Thursday, October 29 2015 - 05:00 AM WIB
IDX-listed coal miner PT Toba Bara Sejahtera Tbk said Thursday that net profit in the first nine months of this year (9M2015) reached US$20.3 million, a 34.32 percent drop compared to $30.91 million in the corresponding period of last year due to a combination of declining price and sales volume.
While not disclosing the production volume for the January-September period, Toba Bara said in a statement that output during the third quarter of this year reached 1.6 million tons, which is in line with its 2015 quarterly guidance of between 1.5 ? 2.0 million tons.
The company said that such production volume resulted from operations of all three operating subsidiaries with the following respective contributions. ~1.0 million tons from PT Adimitra Baratama Nusantara (ABN), ~0.3 million tons from PT Indomining (IM), and ~0.3 million tons from PT Trisensa Mineral Utama (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 three quarters, Toba Bara said.
Year-on-year stripping ratio (SR) declined by 6.8 percent to 12.3x in 9M15 from 13.2x in 9M14, reflecting the company?s continued efforts in improving its operational performance amidst the low coal price environment.
Toba Bara said this was in line with achieving the company?s 2015 annual SR target of 11x ? 12x. ABN lowered its SR from 13.8x in 9M14 to 13.1x in 9M15, IM from 13.2x to 12.2x, and TMU from 12.7x to 9.3x over the same period.
With the strategy to continually lower overall costs towards maintaining certain profitability margin, the company said it managed to reduce its SR and to sustain stable overburden dump (OB) distance, which, including fuel cost, typically account for 65-70 percent of FOB cash cost.
The company said its average selling price (ASP) only contracted by 12.8 percent y-o-y from $ 64.1/ton in 9M14 to $55.9/ton in 9M15, which compared favorably with NEWC Index price that fell 16.1 percent y-o-y over the same period. ?The ASP outperformance over the NEWC Index price has so far materialized for two consecutive years in 2013 and 2014,? Toba Bara said.
The company said it capitalized on the market momentum during the latter parts of 2013 and 2014 by selling forward to its quality buyers the majority portion of its sales volume predominantly based on fixed pricing. As of 9M15, the company said it has secured contracts accounting for more than 90 percent of its 2015 sales volume target at fixed price. This marketing initiative has enabled the Company to maximize its pricing strategy given the adverse coal market condition.
During 9M15, the company sold its coal mainly to Asian countries, such as Korea, Taiwan, Malaysia, and India underscoring its ability to swiftly and continually diversify away from any concentration risk of dealing with a single major country.
Toba Bara said weaker global coal prices combined with y-o-y lower sales volume of 21.3 percent exacerbated the impact to the company?s sales by 31.1 percent from $389.7 million in 9M14 to $268.6 million in 9M15.
It said that a 32.9 percent decrease in cost of goods sold from $323.3 million in 9M14 to $217.0 million in 9M15 stemmed from a reduction in FOB cash cost, slipping by a significant 15.1 percent y-o-y from $51.5/ton to $ 43.7/ton in 9M15. This resulted from cost management initiatives, better execution of mine plan, and lower fuel costs.
Meanwhile, EBITDA/ton stabilized at $ 8.8/ton in 9M15 as a result of predominantly stable sales volume, better mine plan execution, and lower mining cost. The first graph below depicts the EBITDA/ton evolution on q-o-q basis from $8.8/ton in 3Q14 to $8.3/ton in 3Q15 and the NEWC Index price from $68.4/ton to $59.0/ton over the same period.
Editing by Reiner Simanjuntak