Mar 2, 2011

Demurrage may hurt Bumi, Adaro profits

JPMorgan Chase & Co. cut fourth quarter profit forecasts for PT Bumi Resources Tbk (BUMI) and PT Adaro Energy Tbk (ADRO) by as much as 7% after weather delays led to increased payments to ship owners.
Adaro may have incurred US$60 million in costs in 2010 to keep vessels waiting at ports across Kalimantan, Stevanus Juanda, a Jakarta-based analyst for bank, said in a report yesterday.
Bumi may have lost US$18 million in such charges, known as demurrage, while Indo Tambangraya Megah paid US$23.5 million, he said.
"As bad weather had affected the operations of mines, our channel checks indicate that ships had been waiting for coal shipments at the ports across Kalimantan," Juanda said as quoted by Bloomberg today.
"Demurrage charges could potentially affect fourth quarter and fiscal year 2010 net incomes of Indonesian coal companies."
Heavy rains hurt production at Indonesian coal mines last year with output during the fourth quarter dropping 15% to 10.36 million tons compared with the same period a year earlier, Adaro said in a statement posted on the stock exchange website on January 31.
Bumi, Indonesia's largest coal mining company, fell 1.68% to Rp2,925 rupiah as of 12:20 p.m. local time on the Indonesia Stock Exchange. Adaro slumped as much as 3.1% to Rp2,350 rupiah after the U.S. bank said its earnings forecasts may be lower by 11%in 2010.
Disclosure: No position at the stock mentioned above.

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