UT reports 44% drop in net profit

By Romel S. Gurky

IDX-listed heavy equipment and mining firm PT United Tractors Tbk said that net profit in the January-September period of this year dropped by 44 percent to Rp 3.1 trillion from Rp 5.6 trillion in the corresponding period of last year as the mining sector continued to suffer from the commodity downturn of the past four years.

UT said in a statement on Thursday that as of September 2016, the company recorded net revenue of Rp 33.9 trillion or down 11 percent compared to Rp 38.3 trillion in the same period in 2015.

?Lower operational performance and profit margin, particularly in Construction Machinery and Mining Contracting, added with foreign exchange loss, resulted in net profit amounted to Rp3.1 trillion, a decrease of 44 percent from Rp5.6 trillion,? the statement said.

Construction Machinery segment recorded a decrease in Komatsu sales volume by 12 percent to 1,588 units from 1,799 units. Following the decline in heavy equipment sales, spare parts and maintenance services revenue also decreased by 10 percent to Rp4.2 trillion. Meanwhile the sales of other brands such as UD Trucks and Scania were increased. Overall, Construction Machinery segment recorded a decrease in revenue by 1 percent to Rp10.6 trillion.

Mining Contracting business segment also recorded a decrease in coal production by 3 percent to 78.6 million tons, and lower overburden removal by 12 percent to 524.2 million bcm. As a result, Mining Contracting recorded a decrease in revenue by 24 percent to Rp17.7 trillion.

Mining business segment recorded an increase in coal sales volume by 46 percent to 5.7 million tons, with net revenue increased by 27 percent to Rp 4.2 trillion. The fourth segment, Construction Industry booked a revenue of Rp 1.3 trillion.

Overall, revenue contribution was mostly from Mining Contracting that is 52 percent, followed by 31 percent from Construction Machinery, 13 percent from Mining, and 4 percent from Construction Industry.

The company?s Mining business segment is operated by PT Tuah Turangga Agung (TTA). At the moment, TTA only operates one coal mining concession namely PT Asmin Bara Bronang (ABB). Total coal production was able to increase by increasing the production capacity and higher contribution from coal trading business, causing an increase in coal sales volume by 46 percent or a total of 5.7 million tons, compared to 3.9 million tons in same period 2015. This has caused an increase in revenue of Mining business by 27 percent, from Rp 3.3 trillion to Rp 4.2 trillion.

The company operates its Mining Contracting business through PT Pamapersada Nusantara (PAMA). As of September 2016, PAMA was able to maintain 48 percent revenue market share (source: internal market research). Until September 2016, PAMA recorded a decrease in net revenue by 24 percent to Rp17.7 trillion, compared to Rp23.4 trillion in the same period last year. Coal production was down 3 percent to 78.6 million tons from 81.4 million tons, while overburden removal was down by 12 percent from 594.7 million bcm to 524.2 million bcm.

Editing by Reiner Simanjuntak