Mar 31, 2011

Delta Dunia suffers Rp159 billion net loss

PT Delta Dunia Makmur Tbk (DOID), parent company of Indonesia's second largest coal mining contractor PT Bukit Makmur Mandiri Utama (BUMA), today reported IDR159 billion net loss last year, unchanged from IDR160 billion net loss in the previous year.
In a company update obtained by Insider Stories today, the net loss was in part of attributable of extraordinary items recorded last year. Delta Dunia recorded net other loss of IDR1 trillion, widened from IDR614 billion. The biggest contributor for the net other loss was loss on long term liabilities redemption of IDR335 billion, impairment loss of IDR264 billion, and others of IDR59 billion.
Despite those items, Delta Dunia's interest expense also surged 117% to IDR542 billion from IDR250 billion. At the operational line, Delta Dunia booked a 16% decrease in operating profit to IDR1.04 trillion from IDR1.24 trillion. Gross profit also slightly fell 9% to IDR1.35 trillion from IDR1.49 trillion. 
The company posted IDR5.79 trillion gross revenue, representing a 9% decrease from IDR6.35 trillion. 
Extraordinary items
Bukit Makmur recorded IDR335 billion or US$37 million in extraordinary expenses associated with the refinancing of a US$325 million high yield bonds due in 2014 and a US$285 million syndicated loan.
The refinancing opportunity arose due to a change in withholding tax regulations that elevated the effective interest expense from a coupon of 11.75% to 14.7%.
Over the remaining life of the bonds, BUMA saved approximately US$80 million in interest expense net of all fees and expenses recorded in 2010.
BUMA also recorded an impairment of IDR190 billion or US$21 million associated with a legacy fuel consumption charges disagreement with PT Berau Coal, which is a major client for BUMA as well.
Delta Dunia has also provisioned IDR73 billion against an investment in a subsidiay that holds undevopped land in Balikpapan, Kalimantan.
The provision is based on an independent appraisal and reflects market value. The property portfolio is immaterial when compared to BUMA and should be considered non-core.
BUMA operational performance
Overburden removal and coal production rose 5.2% and 6.9% respectively last year to 292.2 million bank cubic meter (bcm) and 35 million tons. The prolonged rainy season hampered the industry growth in general. Total heavy equipment capex last year was US$209 million, an increase from US$81.5 million in the previous year.

Disclosure: No position at the stock mentioned above.  

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