14 May 2019

Net Income of USD 39 Million amidst Coal Price Fluctuation

The coal demand in 1Q19 was softer than usual as a result of mild weather and economic slowdown. On the supply side, lower rainfall in Indonesia led to high coal output. As a result, coal price has been declining globally.

Despite a slight drop in coal price, our total sales grew by 20% compared to the one in same period last year as total sales volume rose by 36%.

The net income, however, declined by 33% from USD 58 million in the first quarter of 2018 to USD 39 million in the same period this year mainly as a result of weaker average coal price. The company’s average coal selling price dropped by 15% to USD 71.1 per ton in the first quarter 2019 from USD 83.6 per ton in the same period in the preceding year. 

Furthermore, lower net income resulted from higher costs as a result of higher stripping ratios due to reserve optimization.  The spike in stripping ratio is temporary and is planned to be lower in the subsequent quarters.  

With lower ASP and higher cost, 1Q19 gross profit margin was recorded at 21% versus 29% in the first quarter in the previous year while EBIT in this period declined by 35% to USD 57 million.  Earnings per share during the period was booked at USD 0.036.

By the end of March 2019, ITM’s total assets were valued at USD 1,470 million while total equity was USD 853 million. The company has maintained a strong net cash position of USD 392 million with short term working capital borrowings of USD 14.5 million.

The company sold 6 million tons throughout the first quarter of 2019, shipped to China (1.9 million tons), Japan (1.1 million tons), Indonesia (0.6 million tons), India (0.5 million tons), Bangladesh (0.5 million tons), Thailand (0.4 million tons), and other countries in East, South, and Southeast Asia.

In the first quarter of 2019, the company produced 5,8 million tons of coal. For 2019, production volume is targeted at 23.6 million tons while our sales volume target has been set at 26.5 million tons, of which 78% has already been sold.

With rapid technology advancements and a fast-changing environment in the energy sector, ITM sees significant potential to use technology, digital capabilities and mindset to create more value for shareholders. As a result, we have commenced a digital transformation process. The digital transformation is aimed to improve our technology, our mindset and our organization to innovate ways of work, improve products and services and expand into new business potentials. We believe that the result from the digital transformation will be one core key competency to execute our strategies in the years to come.