C

oal miner Indo Tambangraya Megah (ITMG) ended 2014 with sluggish sales, as coal prices remain low amid slowing global demand and oversupply.

The publicly listed miner saw net sales down by 11 percent to US$1.94 billion in 2014 from $2.18 billion the previous year, according to a recently published financial report. The company also recorded that sales shrunk by around 11 percent in 2013.

The declining revenue is in line with slumping coal prices over the past few years, hauled by oversupply and declining demands from China, one of the world main coal buyers.

This 2014 figure was slightly off from the company'€™s previous estimate that it could pocket $2 billion to $2.03 billion by the end of 2014, with an assumption that coal prices would hover at $68 or $69 billion a ton, finance director Edward Manurung previously said.

Indonesia'€™s coal price reference (HBS) showed that coal prices had slumped by nearly 60 percent in the last three years to hover around $64 per ton as of January.

Indo Tambangraya, however, managed to maintain its net profit at $200.22 million '€” only slightly down compared with $204.98 million generated in 2013 '€” largely because of cost reductions, after the company'€™s bottom line shrank 46.65 percent year-on-year in 2013.

Indo Tambangraya'€™s cost of goods sold declined by 9.47 percent to $1.53 billion in 2014 from $1.69 billion a year earlier, while other costs '€” including selling and general administrative expenses '€” deflated by 22.37 percent on an annual basis to $146.06 million.

Edward said on the previous occasions that Indo Tambangraya took advantage of the slump in oil prices, which helped the company to reduce its energy costs.

'€œFuel costs account for around 30 percent of our total operation costs,'€ he said.

Oil prices fell to the lowest level since 2009 last month, plunging by more than half to $50 per barrel since early last year, as the United States pumped the most oil in three decades and the Organization of Petroleum Exporting Countries (OPEC) declined to cut output to defend its share of the global mark, according to a Bloomberg report.

Indo Tambangraya plans to produce 30 million tons of coal this year, only slightly up compared with 29.5 million tons last year, as the coal prices remain unpredictable.

Edward said the company decided to revise its capital expenditure to $60 million, from the previous assumption of $80 million, after the company only managed to spend $55 million last year from its initial allocation of $85 million.

The capital expenditures will be spent mostly on enhancing mining infrastructure.

Currently, Indo Tambangraya operates six mines in Central Kalimantan, East Kalimantan and South Kalimantan.

The company is currently deliberating a plan to develop a coal-fired power plant with a capacity to produce 1x100 megawatt electricity, with an estimated investment of around $100 million.