Toba?s net profit jumps 199% on higher coal price

By Romel S. Gurky

Petromindo|Khalsa

IDX-listed coal mining firm PT Toba Bara Sejahtra Tbk said net profit in the January-September period of this year jumped by 199 percent to US$29 million compared to the same nine-month period of last year, despite lower coal production and sales volume.

The company said in a recent statement that the strong net profit was attributed primarily to higher average selling price (ASP) of its coal products during the nine-month period of this year (9M17) compared to the corresponding period of last year (9M16).

ASP in 9M17 rose by 32.1 percent to $59.2 per ton from $44.8 per ton in 9M16, while NEWC Index price rose higher by 51.1 percent y-o-y over the same period, Toba said in the statement.

?The company recorded sales of $211.3 million in 9M17, or 10.0 percent higher compared to that in 9M16 as a result of much higher ASP despite lower sales volume. Hence, the much higher ASP growth y-o-y compared to the slower reduction in sales volume directly boosted the much stronger financial margins over the period,? the statement said.

Meanwhile, coal production volume in the first nine-month period of this year declined to 3.7 million tons from 4.2 million tons in the corresponding period of last year, while sales volume fell to 3.5 million tons in 9M17 from 4.3 million tons in 9M16.

?The lower production volume in 9M17 compared to 9M16 was due to adverse weather condition from heavier than expected rainfall,? the company said.

Elsewhere, Toba said that production in the third quarter of this year (3Q17) stood at 1.4 million tons, generated by all three subsidiaries of PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM), and PT Trisensa Mineral Utama (TMU) located in East Kalimantan, contributing 0.93 million tons, 0.15 million tons, and 0.28 million tons respectively.

ABN remained the largest contributor to the company?s overall production volume, accounting for 68.4 percent of total 3Q17 production followed by TMU and IM at 20.9 percent and 10.7 percent respectively.

?The company?s annual production guidance for 2017 is estimated at 5 - 6 million tons,? Toba said.

Such production number of 1.4 million tons and SR of 12.6x came in within the quarterly production guidance of 1.25 -1.50 million tons and quarterly SR guidance of 12.0x -13.0x respectively, the company said. This was primarily due to some improvement in production activity despite relatively high rainfall particularly in August. ?Continued heavy rainfall since 1Q17 until 2Q17 has impacted the operational activity during the 1H17 period.?

In 9M17, the company predominantly sold its coal to South Korea, Thailand, Malaysia, and Taiwan. As a percentage of total customer base, the compositions of end-users and traders in 9M17 were recorded at 25.3 percent and 74.7 percent respectively compared to 30.0 percent and 70.0 percent respectively in 9M16. From 9M15 to 9M17, sales contribution consistently derived from mainly 5600 GAR products.

As of 9M17, a predominant mixture of midupper quality of 5600 - 5900 GAR still account for Toba?s largest product composition. Major international traders and notable end-users such as major regional power generation companies account for the company?s main dedicated customers.

Meanwhile, around 40.7 percent of total sales volume by product was contributed by the 5600 GAR calorific value (CV), 12.3 percent by the higher 5800 GAR and 5900 GAR LS, and 44.4% by the lower 4800 ? 5200 GAR coal qualities.

?As of 9M17, the company has secured contracts accounting for almost 100 percent of its 2017 sales volume target predominantly at fixed price,? Toba said.

Elsewhere, Toba said cost of goods sold slipped by 4.7 percent y-o-y, resulting mainly from lower production volume.

A 92.2 percent y-o-y increase in EBITDA to $51.9 million in 9M17 from $27.0 million in 9M16 significantly increased EBITDA margin from 14.1 percent to 24.6 percent over the period, Toba said. 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.

Editing by Reiner Simanjuntak