Sturdier Performance in 2017, ITM Transforms Itself into Energy Company

28 Feb 2018 15:44

PT Indo Tambangraya Megah Tbk. (ITM) has shown an increasingly strong performance throughout 2017 due to significant upsurge in coal price as well as effective management strategy.

Net income was booked at USD 253 million in 2017 versus USD 131 million in 2016. Average selling price along the year was at USD 73.0 per ton, rose by 43% from USD 51.0 per ton in the preceding fiscal year.

Higher average selling price resulted from higher global demand while coal was in short supply as bad weather had inhibited coal production in supplier countries.

Rising coal consumption in China made the government open for coal imports since the end of the year due to severe winter in conjunction with sluggish domestic production. In India the coal shortage led to higher reliance on imported coal.

With sales volume of 23.1 million tons throughout the year, the company booked sales revenue of USD 1,690 million, 24% higher than USD 1,367 million in the previous year. Gross profit margin was at 30% compared to 24% in the preceding year, while EBIT rose by 89% to USD 388 million from the earlier year. Earnings per share this quarter was USD 0.23.

By the end of 2017, ITM’s total assets were valued at USD 1,359 million while total equity was USD 958 million. The company has maintained a net cash position of USD 374 million with zero debt.

The Company sold 23.1 million tons throughout the year which was shipped to Japan (5.3 million tons), China (4.2 million tons), Thailand (2.7 million tons), India (2.6 million tons), Indonesia (2.5 million tons), South Korea (1.8 million tons), Philippines (1.7 million tons), and other countries in East, South, and Southeast Asia.

For 2018, production volume is targeted at 22.5 million tons while our sales volume target has been set at 25 million tons, of which 53% has already been sold.

By renewing assumptions and explorations as well as acquiring PT Tepian Indah Sukses with reserves of 4.7 million tons, the company has added reserves by 77 million tons along 2017, making its reserves 253 million tons in total as of the end of the year.

For 2018 the company is executing several strategies to make its position as energy company stronger. Firstly, maximizing long term value by increasing coal reserves both organically and inorganically as well as enhancing margin through operational excellence, improving productivity and enhancing business process.

Secondly, capturing margin along the value chain. The acquisition of PT GasEmas last year, for instance, has resulted in fuel cost reduction and created opportunity of additional margin from third parties.

In addition, the company has allocated capital expenditure worth USD 40 million for its subsidiary engaged in mining contractor, PT Tambang Raya Usaha Tama (TRUST), to expand its fleet. Other than that, the company has set a target for its subsidiary engaged in trade – that is, PT ITM Indonesia – to obtain sales contract of 2.5 million tons of coal.

Additionally, the company is actively evaluating new investment and acquisition opportunities in conventional and renewable energy.

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