BUMI posts $334.1 million loss in first quarter

JAKARTA. PT Bumi Resources (BUMI), Asia’s largest thermal coal exporter, is announcing net losses of US$334.1 million for the first half of 2012, or a loss of $15.87 per share, according to a financial report submitted to the Indonesian Stock Exchange (IDX) on Sunday.

Although the coal miner reported an 8.5 percent increase in revenue, it also booked net losses on a weaker rupiah and undervalued derivative assets.

The firm reported $145.8 million in losses from derivative transactions and $50.2 million in losses from foreign currency discrepancies in the first half, the report said.

The figures stand in stark contrast compared to the same period last year, when BUMI reported $212.2 million in income from derivative transactions and $80.9 million from foreign exchange.

Among derivative transactions contributing to losses were its equity swap and capped call transactions with Credit Suisse, which valued most of BUMI’s financial instruments at an amount lower than the nominal face value previously agreed to with the Switzerland-based investment firm.

Reza Priyambada, an analyst with Indosurya Asset Management, said that the net losses were a blow for BUMI, which has been struggling to restore its image and regain investor confidence, as evinced by its declining share price.

Bumi Resources’ share price has plunged almost 50 percent since the beginning of this year from Rp 2,171 apiece to trade at Rp 940 apiece over the weekend.

“Investors have already had significant concerns over BUMI’s internal management, coupled with low commodity prices that have already deterred market players from investing their money in the mining industry,” Reza said on Sunday. “After seeing BUMI’s first half performance, however, investors will surely back away further from the company.”

Reza predicted that BUMI would see its share price plunge further in coming weeks, and especially at the start of trading on Monday, when investors would have their first chance to respond to the financial report.

BUMI was once the nation’s biggest mining company by market capitalization, which stood at Rp 75 trillion (US$7.89 billion) in 2011.

However, due to shrinking share prices, the company’s market capitalization currently stood at only Rp 19.5 trillion as of Friday, according to data compiled by Bloomberg.

Earlier in August, rating agency Standard & Poor cut BUMI’s credit rating to BB-, two notches lower than an investment grade rating of BB, citing concerns on the company’s ability to pay debts.

As of June 30, BUMI’s total debts topped $6.5 billion, with current liabilities of $1.79 billion and non-current liabilities of $4.72 billion, according to the financial report.

BUMI also reported that its operating income declined to $239 million in the first half of 2012, down 48 percent from $461 million in the same period last year.

The report attributed the decline to a 67 percent jump in operating expenses to $314.9 million, among other factors.

The internal management of Bumi Resources has been criticized by Nathaniel Rothschild, the co-chairman of the London-listed Bumi Plc., which owns a 29.2 percent stake in Bumi Resources.

In a letter leaked to the media last year, Rothschild criticized the management of Bumi Resources, calling for a “radical cleaning up” of the company.

He also expressed concerns over Bumi Resources’ piling debts and described the company as “over-leveraged”. (The Jakarta Post)