18 Aug 2017

Net Income Tripled Resulting From Higher Average Price

PT Indo Tambangraya Megah Tbk. (ITM) in the first half of the year recorded triple its net income achieved in the same period in the previous year thanks to average selling price that rose significantly.

Net income was booked at USD 105 million in the first semester of 2017 versus USD 36 million in the same period last year. Average selling price in the first period was at USD 68.4 per ton, rose by 48% from USD 46.3 per ton in the same period in the preceding year. Higher average selling price resulted from higher demand particularly in China due to restricted domestic supply.

With sales volume of 10.9 million tons throughout the first semester, the company booked sales revenue of USD 749 million, 23% higher than USD 609 million in the same period last year. Gross profit margin during this period was at 28% compared to 19% in the same period last year, while EBIT rose by 173% to USD 160 million on year-on-year basis. Earnings per share this quarter was USD 0.10.

By the end of the first half of 2017, ITM’s total assets were valued at USD 1.255 million while total equity was USD 916 million. The company has maintained a net cash position of USD 370 million with zero debt  at the end of the first semester.

The Company sold 10.9 million tons throughout the first semester which was shipped to Japan (2.3 million tons), China (2.3 million tons), Indonesia (1.4 million tons), Thailand (1.3 million tons), India (0.9 million tons), South Korea (0.8 million tons), Philippines  (0.8 million tons), and other  countries in East, South, and Southeast Asia.

For 2017, production volume is targeted at 23.8 million tons while our sales volume target has been set at 25 million tons, of which 89% has already been sold.

Coal price in the second half is expected to be affected by current China’s coal production policy. The government of China has revoked its restriction policy on coal production since the first quarter of the year, yet the country’s output capacity is unlikely to have capability to fulfill a rapid rise in demand.  We expect stable coal price up to the end of the year.

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 third 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.