PT Indo Tambangraya Megah Tbk. (ITM) recorded growth in total sales revenue in the first half of 2019 amidst global economy slowdown.
The global economy which was under pressure as a consequence of trade war has caused coal demand – mainly from China – to weaken worldwide, resulting in a lower coal price.
Nevertheless, sales revenue went up by 10% to USD 893 million from USD 809 million in the first half in the preceding year. That resulted from higher sales volume by 28% from the same period last year to 12.3 million tons.
However, the company’s net income went down by 31% from USD 130 million in first half of last year to USD 69 million in the same period this year, mainly due to weakening coal price. The average coal price in the first half of 2019 was recorded USD 68.8 per ton, 16% lower from USD 80.9 per ton from the same period last year.
On the other hand, higher sales volume was also parallel with higher coal production volume causing roduction cost to increase. Furthermore, lower net income was also contributed by higher costs as result of higher stripping ratio as the company in the first half continued optimizing coal reserves by digging deeper.
With lower ASP and higher cost, gross profit margin was recorded 10% lower to 18% versus 28% in the first half of last year while EBIT in this period declined by 42% to USD 96 million. And lastly the net income in the first half of the year was recorded at USD 69 million. Earnings per share during the period was booked at USD 0.006.
By the end of June 2019, ITM’s total assets were valued at USD 1,324 million while total equity was USD 885 million. The company has maintained a strong net cash position of USD 287 million with short term borrowings of USD 4 million.
The company in the first half of this year shipped coal to China (4.0 million tons), Japan (2.0 million tons), Indonesia (1.6 million tons), India (0.8 million tons), Bangladesh (0.6 million tons), and other countries in East, South, and Southeast Asia.
In the first half of 2019, the company produced 11.4 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 93% 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.