Bukit Asam reports slowing profits on rising costs

JAKARTA. Publicly-listed coal mining firm PT Bukit Asam (PTBA) is reporting lower profit growth for the first six months of the year on rising expenses and relatively flat coal prices.

PTBA booked Rp 1.56 trillion (US$165.36 million) in net profits the first half, a 3 percent drop from Rp 1.61 trillion in the same period last year.

Meanwhile, the firm reported revenues of Rp 5.79 trillion in the first half of 2012, up 13 percent over Rp 5.11 trillion. “The increase was actually below our minimum target of 20 percent growth,” PTBA president director Milawarma said on Tuesday.

The revenue bump was attributed to a 13 percent rise in the firm’s coal sales volume to 7.36 million tons in the first half, up from 6.54 million tons year on year.

The company’s average selling price (ASP) stood at Rp 785,043 a ton in the first six months, up 0.5 percent over Rp 781,228 per ton year on year.

PTBA purchased 810,000 tons of coal in the first half and mined 7.08 million tons, up 14 percent compared to 6.19 million tons in the same period last year.

Revenue increases failed to compensate for surging costs. “Our production is higher compared to deliveries, leading to a burden for production costs,” Milawarma said, adding that the company also recorded increased expenses for coal contractors, rental payments for heavy equipment, higher fuel prices and increased minimum wages in several locations.

The company’s operating profits stood at Rp 1.81 trillion in the first six months of 2012, down 5 percent from Rp 1.97 trillion in the same period last year.

“Our decline in net profits is still better, as we note that the world coal price index has declined about 20 to 25 percent, year on year,” Milawarma said.

Increased production and lower international demand following the global economic crisis and China’s economic slowdown has also contributed to the decline, Milawarma said.

PTBA has targeted mining around 17 million tons this year and expects to sell 18.66 million tons by the year end, which would be 39 percent more than the 13.47 million tons it sold in 2011.

Sales growth is expected to help the company reap Rp 14 trillion in revenue this year, which would be up 32 percent over Rp 10.58 trillion last year.

Milawarma said that PTBA remained optimistic about the target amid a declining selling price.

“About 65 percent of our coal has already been contracted to [state power company] PT PLN. We are concerned with the remainder because the price over the next three to six months will follow current prices,” Milawarma said.

He said that the firm’s coal contracts with PLN were valued at Rp 825,000 a ton for delivery of February to December this year, while the price for January delivery topped Rp 815,000.

Milawarma said that the PTBA would undertake several actions to meet its full-year target.

“We will control expenses to match them with what we produce and sell. We will also carry out selective mining, meaning that we will encourage the sales of high calorie coals that give a higher margin,” Milawarma said. (Raras Cahyafitri/ The Jakarta Post)