PT Indo Tambangraya Megah Tbk. (ITM) in the first half of 2018 continued to strengthen its position as energy company by adding coal reserves of 77 million tons with the acquisition of 100% stake in PT Nusa Persada Resources (NPR) with total purchasing value of USD 30 million.
Holding Mining Business License for a concession area of 4,291 hectare in Central Kalimantan, NPR is grouped into Melak Cluster along with three other existing ITM subsidiaries, that is, Bharinto Ekatama (BEK), Trubaindo Coal Mining (TCM), and Tepian Indah Sukses (TIS).
NPR will add competitive advantage to those Melak Cluster mines portfolios with its 5,500 kcal/kg coal reserves.
The mine infrastructure is going to be constructed next year with initial production starting 2022.
As for ITM performance in the first half of 2018, it remained solid amidst rainfalls slowing down the production. The company recorded a net income of USD 103 million in the first half of 2018, slightly lower by 3% from USD 105 million in the same period last year. Average selling price in the first half was at USD 80.9 per ton, rose by 18% from USD 68.4 per ton in the same period last year.
Higher average selling price resulted from higher demand particularly in China due to restricted domestic supply which continued to the beginning of the year.
The company booked sales revenue of USD 809 million, 8% higher than USD 749 million in the same period last year. Gross profit margin during the period was as the same amount as it was in previous year – that is, 28% – while EBIT rose by 4% to USD 167 million on year-on-year basis. Earning per share in this period was booked at USD 0.09.
By the end of the first half of 2018, ITM total assets were valued at USD 1,310 million while total equity was USD 899 million. The company has maintained a net cash position of USD 268 million with zero debt.
The Company sold 9.6 million tons in the first half, lower by 12% than it did in the same period last year. It was shipped to Japan (1.7 million tons), China (1.5 million tons), Philippines (1.2 million tons), India (1.1 million tons), Indonesia (1.1 million tons), Thailand (0.6 million tons), South Korea (0.5 million tons), and other countries in East, South, and Southeast Asia. Out of the sales volume target of 25 million tons for this year, 87% has been sold out.
Lower sales volume was as a result of lower output due to heavy rainfall. The company produced 9.3 million tons in the first half with an output volume target of 22.5 million tons for this 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.