P

ublicly listed coal miner PT Bukit Asam (PTBA) has reported falling profits in the first quarter of the year, due primarily to a declining average selling price (ASP).

The state-owned company booked Rp 493.18 billion (US$51.3 million) in net profits in the first three months of the year, a drop of 43 percent compared to Rp 867.34 billion in the same period last year.

PTBA's coal sales actually rose by 17 percent to 4.51 million tons during January to March compared with 3.85 million tons mined in the same period in 2012. However, the increase in sales volume failed to offset the 27 percent decline in ASP to Rp 613,810 per ton in the first quarter of the year versus Rp 781,142 in the same period last year.

Consequently, the company reaped lower revenues of Rp 2.78 trillion during the first quarter, which was 8 percent lower than the Rp 3.02 trillion in revenues for the same period in 2012.

The company also attributed the fall in net profits to a surge in financial costs and lower non-operating income.

 The company said it would undertake several measures, such as prioritizing sales of high calorie coal to export markets and using its own coal-fired power plant to support operational activities, as part of an efficiency drive amid pressures on the price of coal.

'The PTBA will prioritize the export of high calorie coal, particularly to Japan and Taiwan,' PTBA corporate secretary Joko Pramono said on Tuesday.

Despite its poor first quarter performance, the PTBA plans to meet its target to sell 20.68 million tons of coal this year, a 35 percent increase compared to 15.3 million tons in 2012. The higher sales volume will be supported by improved coal transportation by state-owned railway operator PT Kereta Api Indonesia (KAI), thanks to more locomotives and cars.

The company also has long-term contracts with several buyers, including state-owned electricity firm PT PLN, PT Indonesia Power and PT Pupuk Indonesia. The PTBA is allocating between 30 and 35 percent of its sales volume target this year to spot markets.

'Selling to spot markets aims to mitigate the volatility of the coal price in the global market,' Joko said, adding that the trend toward higher coal prices would likely continue.

Joko said the PTBA was in talks with PLN and Indonesia Power to adjust the coal price in line with the expected increase in prices.

'We hope to see better performance in the second quarter,' he added.

Indonesia's coal reference price (HBA) was set at $88.56 per ton this April, lower than $90.09 per ton in March. The price of coal at the Australian port of Newcastle, which is the benchmark for coal in Asia, fell by $2.5 to $85.85 per ton in the week ending April 19, according to data provider IHS McCloskey as cited by Bloomberg. The price was the lowest for five months, it said. The PTBA, whose total assets were worth Rp 13.43 trillion as of the end of March, is currently 65.02 percent owned by the government and 34.98 percent by the public.

PTBA shares closed at Rp 15,200 apiece on Tuesday, a slight decline of 0.65 percent compared to a day earlier.