Oct 29, 2010

Adaro Energy 9M net profit plunges 52%

Publicly listed one of Indonesia's largest coal miner PT Adaro Energy Tbk (ADRO) today announces a 43% decrease in net income to US$186 million or a 52% decrease to Rp1.69 trillion for the first 9 months period ended September 30 2010.
In a press statement filed to Indonesia Stock Exchange (IDX) today, earning per share tumbled from Rp109.9 to Rp53 in 9M 2010.
The lower net income was due to extraordinary demurrage charges, lower gross profit as a result of higher costs and significantly higher interest expense and finance charges.
“It has been a difficult year due to unseasonal and unprecedented rainfall, but our long-term plans look better than before. We maintained a robust EBITDA of US$701 million and a solid industry topping margin of 35%. Our bright assessment of the future and financial strength means we will make long term investments and create maximum shareholder value," said Adaro Energy’s President Director Garibaldi Thohir in the statement.
Consolidated unaudited net revenue increased 6% to US$1.98 billion in 9M 2010 due to 12% production growth despite the 7% lower achieved average selling price.
Adaro's production and sales volumes in 9M 2010 both increased 12% to 31.84 million tonnes and 32.36 million tonnes respectively.
Lower than expected coal production volumes were caused by heavy rainfall during the period.
Due to higher mining costs, caused by a higher strip ratio and longer overburden hauling distances, the company's cost of revenue increased 22% causing operating income to decline 16% to US$593 million.
With net debt to equity at 0.45x and abundant access to cash of US$1.2 billion, its prudent financial policies have created a robust capital structure and strong access to capital markets.
Adaro Energy continued pursuing its strategy of continuing its annual organic production growth, improving the efficiency of its vertically-integrated coal supply chain which might include further downstream integration into power, and acquiring or investing in large quality coal deposits within Indonesia.

Disclosure: No position at the stock mentioned above.

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