Falling commodity prices hurt Timah, Adaro

JAKARTA. The sharp decline in commodity prices due to the slowing global economy last year had a severe impact on the financial performance of commodity-based companies such as listed tin mining company PT Timah and coal producer PT Adaro Energy.

State-owned Timah reported a 52 percent fall in its net profit to Rp 431.57 billion (US$44 million) last year, compared to Rp 896.78 billion in 2011.

“The smaller net profit was due to the lower global tin price in the LME [London Metal Exchange] with a difference of $5,208 per metric ton compared to last year,” Timah corporate secretary Agung Nugroho said.

Timah’s average selling price stood at $21,505 per metric ton in 2012, declining by around 20 percent from $26,714 in 2011.

The company sold more refined tin last year to 34,934 metric tons, increasing slightly by 2.8 percent compared to 33,971 metric tons year on year. 

However, the increase in sales volume failed to lift Timah’s revenue, which fell by 10.6 percent to Rp 7.82 trillion in 2012 from Rp 8.75 trillion a year earlier.

Major coal miner Adaro reported a similar setback. 

Adaro’s net profits fell 30 percent to $385.35 million in 2012 from $550.35 million year on year. The company’s revenue declined by 6.6 percent to $3.72 billion last year versus $3.99 billion in 2011.

Adaro president director Garibaldi Thohir said that despite lower profits, the company was satisfied with its performance as it had met its target earnings before interest, tax, depreciation and amortization (EBITDA). 

The company’s EBITDA stood at $1.09 billion at the end of 2012, declining by 26.2 percent from $1.47 billion year on year.

“Our business is driven by the global coal market and we could not avoid the impact of weaker coal prices experienced for much of 2012, Garibaldi said in a written statement on Wednesday. 

“We have responded by focusing on consolidation and efficiency to strengthen our company,” the statement explained. 

(Raras Cahyafitri/The Jakarta Post)