23 Feb 2021

Resilient through Challenging Times And Volatility, Establishing Operational Excellence

Corona virus (COVID-19) pandemic situation proved to be the most devastating and unforeseen risk throughout 2020.  COVID-19 impact has touched all businesses and have accelerated shift in consumptions pattern across all products.  Energy business was also hit hard in 2020 with energy demand declined and coal price slumped to a multi-year low due to uncertainties and prolonged pandemic situation.

PT Indo Tambangraya Megah Tbk has proven its resiliency through these challenging times and volatility as it has established operational excellence which enabled the Company to maintain smooth operation while remaining flexible in the cost management.  For the year 2020, the Company recorded production volume of 18.4 million tons with lower strip ratio than the previous year.  For this year, the company targets to produce 17.7-19.9 million tons. 

The Company also managed to reduce its coal business costs by USD 8 per ton through discipline cost control of its mining costs, fuel costs and royalty. 

The combination of the above resulted in satisfactory profit and cash flow generation. EBITDA was recorded at USD 187 million, propped up by the gradual recovery of the Asian economies during the second half of 2020. Financial position remains strong with over than USD 231 million cash balance and consistent dividend distribution along 2020.

To expand the Company’s coal asset portfolio, the Company acquired PT Graha Panca Karsa (GPK) in 2020 to bring more versatility with low calories and low sulphur product type. 

In 2020, the Company also commenced its solar power plant operation at Indominco site, with the largest smart microgrid technology in Indonesia.  Integrated with other energy sources generated by coal and diesel fuel, this solar power plant produces electricity for Bontang Port operations while reducing carbon emissions.  The company has also handed over 7,540 hectare of rehabilitated watershed area to the government, fulfilling its environmental obligations as a good and responsible coal miner. 

During the year of 2020, the Company recorded a sales volume of 21.2 million tons with an average selling price of USD 53.5 per ton, from USD 64.6 per ton last year. The weakening of selling price has lowered the Company's net income from USD 1,716 million to USD 1,185 million while the gross profit margin decreased from 19% to 17% on an annual basis. 

EBIT was recorded at USD 104 million, down by 42% from USD 181 million last year while net profit fell by 70% to USD 38 million from USD 127 million in the same period last year.  Meanwhile, earning per share is recorded at USD 0.04. 

Out of the sales volume target of 20.7-22.9 million tons set for this year, the Company has secured 56 percent of sales contracts.  As much as 18% of the total target has fixed selling price while another 34% refers to the coal price index. 

Throughout 2020, the Company sold 21.2 million tons of coal in which they were exported to China (4.7 million tons), Japan (4.5 million tons), Indonesia (3.8 million tons), Philippines (2.0 million tons), Thailand (1.3 million tons), and other countries in East and Southeast Asia. 

By the end of 2020, ITM’s total assets were valued at USD 1,159 million with total equity of USD 846 million.  The Company has strong cash balance of USD 231 million with USD 43 million debt from bank loan. 

Our strategies in this year and the forthcoming years would be as follows.

Firstly, we continue to improve efficiency in mining operations, maximize coal reserves, and increase the variety of the product portfolio to suit our customer needs. 

We also continue to maximize/synergize the utilization of our current coal assets and infrastructure of adjacent mines and ensure that the development of our green field coal assets is carried out as plan.  We will expand our third party’s coal trading activities to capture highly growing markets and grab wider margins. 

We will also consider renewable energy sources throughout our mines to capture opportunities in energy growth trends such as the mineral/ metal mining business.  As for the downstream side, we will participate in the coal gasification project.

"We express our appreciation to all parties who have provided support to ITM and all its subsidiaries, so that we remain strong and can go through the challenging situation in 2020,” said Mulianto, ITM President Director.