23 May 2017

ITM’s Net Income Doubles Amidst Increased Coal Price Momentum

PT Indo Tambangraya Megah Tbk. (ITM) maintained strong performance in the first quarter of 2017. The company captured opportunities from an increase in coal price during the last quarter of 2016 and into the first quarter of 2017 to realize a higher average selling price in the first quarter, and delivered strong financial results.

In the first quarter of 2017, the company achieved 5.4 million tons of output, slightly better than a target of 5.3 million tons. Average coal price during the first quarter of 2017 was USD 67.5 per ton, 42% higher than USD 47.7 in the same period last year, while the average benchmark coal price dropped slightly to USD 83 per ton from USD 95 per ton respectively. The company recorded sales revenue of USD 368 million.

ITM has recorded an improvement in gross profit margin, 31% this quarter compared to 21% in the same quarter last year. EBIT was also 132% higher year-on-year at USD 89 million. Net income also rose significantly by 148% to USD 57 million from USD 23 million in the same period last year. Earnings per share this quarter was USD 0.05.

By the end of the first quarter of 2017, ITM’s total assets were valued at USD 1,292 million while total equity was USD 866 million. The company has maintained a net cash position of USD million with zero debt  at the end of the first quarter.

Throughout the first quarter of 2017, the Company sold 5.4 million tons which were shipped to Japan (1.3 million tons), China (0.9 million tons), Indonesia (0.8 million tons), Thailand (0.6 million tons), South Korea (0.5 million tons), India (0.5 million tons) and other countries in East, South, and Southeast Asia.
For 2017, production is targeted at 25.5 million tons while our sales volume target has been set at 27 million tons, of which 77% has already been sold. Coal prices in the upcoming quarters are expected to  reflect the change in China’s coal production policy. China has revoked its restriction policy on coal production since the first quarter of this year, which is expected to increase coal supply into the market.

ITM will continue to improve productivity by, for example, optimizing mine infrastructure and maximizing processes such as accelerating barging cycle time. The Company will endeavor to continue to stay ahead of leading market trends and remain flexible both in the short term and long term to maximize reserves value.

The Company is executing several strategies to capture margins across the coal value chain by, for example, using more internal contractors, buying more 3rd party coal to increase coal blending value and improving fuel procurement and logistics processes in order to minimize costs. In addition, ITM is expanding its core business by investing in the power sector in order to capture opportunities from growing electricity demand nationwide.