Coal Prices Plunge, Indo Tambangraya (ITMG) Performance Under Pressure

COAL - JAKARTA. PT Indo Tambangraya Megah Tbk (ITMG), a prominent coal mining company, has experienced a downturn in its performance throughout the first quarter of 2024. This is evident from the decline in net profit and revenue of the company.

According to the financial report published on Friday (10/5), ITMG recorded a revenue of US$ 489.23 million. This figure represents a 29% decrease compared to the revenue in the first quarter of 2023, which amounted to US$ 685.58 million.

In detail, ITMG's revenue was dominated by income from sales to third parties, amounting to US$ 435.40 million. This was followed by revenue from coal sales to related parties worth US$ 33.92 million.

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Customers who accounted for more than 10% of the total consolidated net revenue included sales to Marubeni Corporation, which amounted to US$ 72.3 million.

Geographically, ITMG's revenue in several countries experienced a correction. Sales to China, which dominates ITMG's revenue, fell by 9% to US$ 146 million from previously US$ 161 million in the same period last year. Meanwhile, sales to India, the second largest market after China, fell by 18% year on year (YoY) to US$ 139 million.

Moreover, sales to the Philippines plummeted by 75% to just US$ 20 million from previously US$ 79 million. However, sales to the domestic market increased by 6% from originally US$ 104 million to US$ 110 million. Similarly, sales to India rose by 30% to US$ 19 million.

ITMG's Investor Relations, Agung Putra Sulaiman, stated that from a performance perspective, ITMG's sales volume increased. From January to March 2024, ITMG sold 5 million tons of coal, an 11% increase from sales in the first quarter of 2023, which was only 4.5 million tons. Despite an 11% increase in sales volume, revenue still declined due to the impact of a decrease in the average selling price (ASP).

In that period, the ASP of coal realized by ITMG decreased by 36%, from originally US$ 151 per ton in the first quarter of 2023 to US$9 per ton in the first quarter of 2024. "This decrease is in line with the trend of declining global coal prices," wrote Agung.

From a production perspective, ITMG managed to boost production by 31% to 4.9 million tons of coal from originally 3.8 million tons in the first three months of 2023.

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On the other hand, ITMG managed to reduce several of its costs. One of them is the cost of revenue, which decreased by 12% from the previous year to US$ 369.87 million. This decrease is in line with the decrease in royalty costs due to the lower ASP of coal.

Royalties to the Government decreased by 54% to US$ 52 million. Income tax expenses fell 66% YoY to US$ 18 million from previously US$ 51 million. However, sales expenses increased by 9% to US$ 38.43 in line with the increase in sales volume. Meanwhile, general and administrative expenses decreased by 29% to US$ 7.64 million.

As a result, ITMG recorded a profit for the period attributable to the parent entity of US$ 61.60 million, a steep drop of 66.28% from the net profit achieved by ITMG in the first quarter of 2023, which reached US$ 182.71 million.

Last Friday (8/5), ITMG's shares were at Rp 25,350 per share, down 1.17% year to date (YTD).