Adaro targets moderate growth on stable demand

Publicly listed coal mining company PT Adaro Energy has set a conservative target of net-profit growth at 5 to 7 percent this year compared to last year’s performance, in line with a global-demand forecast.

Adaro president director Gari-baldi Thohir said his company would likely book net profits ranging from US$577 million to $620.6 million, a 5 to 7 percent increase from last year’s net profits of between $550 million to $580 million.

“Last year’s performance was one of the best ever achieved by Adaro. We have set a conservative target this year because, whether we like it or not, we have to anticipate the influence of the European and US economic crises,” Garibaldi said on Wednesday.

The company reaped $2.92 billion in revenue during the first nine months of 2011, increasing by 47.47 percent from $1.98 billion during the same period the previous year.

Adaro’s net profits stood at $376.04 million for the first nine months of 2011, almost double the $191.38 million achieved during the same period in 2010.

Adaro’s total 2010 revenue reached Rp 24.69 trillion, while net profits reached Rp 2.21 trillion ($245.31 million).

The estimated increase in profits is leading Adaro to consider disbursing dividends this year. Garibaldi said the dividends would range from $100 million to $150 million.

“We will seek approval from shareholders,” he said. The company disbursed an interim dividend amounting to Rp 682.29 billion last December.

Garibaldi said Adaro aimed to produce 50 million to 53 million metric tons of coal this year, increasing by 4 percent to 11 percent from 47.7 million metric tons in 2011. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) stood at $1.3 billion to $1.5 billion, Garibaldi added.

According to a file submitted to the Indonesia Stock Exchange (IDX), Adaro’s coal sales reached 50.78 million metric tons in 2011, an increase of 16 percent from the 43.84 million metric tons of sales in 2010.

Garibaldi added that Adaro’s sales won’t be far different this year compared to last year’s achievement.

“Market demands for energy coal are relatively stable because the products are irreplaceable as they are used for generating power. Our sales in the domestic market account for around 20 to 24 percent of our total sales. Our exports go to Asian countries, such as Japan, Taiwan, South Korea, Hong Kong and Malaysia, as well as growing markets in China and India,” he said.

According to Garibaldi, Adaro Energy will set aside up to $700 million as capital expenditure this year. The expenditure will be used to finance internal spending and purchase heavy equipment, particularly for two of Adaro’s subsidiaries: PT Adaro Indonesia and PT Saptaindra Sejati.

The expenditure will be financed from internal cash and bank loans.

Adaro Indonesia is the main contributor to Adaro’s performance. Meanwhile, according to a file available on the IDX website, Saptaindra Sejati reported a 20 percent increase in overburden removal to 43.6 million bank cubic meters (bcm) in 2011, from 36.19 million bcm in 2010. The increase was supported by Saptaindra Sejati purchases of new heavy equipment, amounting up to $139 million in 2011.

Garibaldi said Adaro would continue to focus on the development of its IndoMet Coal project, a joint venture with BHP Biliton. At this moment, Adaro’s subsidiary PT Alam Tri Abadi holds 25 percent of shares in IndoMet Coal, while BHP Biliton holds the remaining 75 percent.

“IndoMet Coal will produce a premium product of choking coal. BHP Biliton is serious about developing its choking coal business because it is a promising sector. We hope that Adaro will also be able to contribute to the development of the choking coal business. We hope that IndoMet Coal can start a trial production in 2013,” he said. (rcf)