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Bukit Asam profits dip 44 percent in September amid weak coal demand
Bukit Asam’s net profits dipped 44.2 percent year-on-year (yoy) to Rp 1.73 trillion (US$121.7 million) in the January-September period this year, as revenues fell sharper than expenses, the company’s latest financial statement shows.
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A field officer monitors heavy equipment at a PT Bukit Asam open pit coal mine .
(Courtesy of/www.ptba.co.id)
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tate-owned coal miner PT Bukit Asam booked a decline in net profits for the third consecutive quarter as weak coal demand, impacted by the COVID-19 health crisis, continued to take its toll on the company’s finances.
Bukit Asam’s net profits dipped 44.2 percent year-on-year (yoy) to Rp 1.73 trillion (US$121.7 million) in the January-September period this year, as revenues fell sharper than expenses, the company’s latest financial statement shows.
The publicly listed miner slashed operational expenses by 11.4 percent yoy to Rp 9.3 trillion in the first nine months of this year but its revenues slumped by a steeper 21 percent yoy to Rp 12.85 trillion.
Due to the efficiency measures, Bukit Asam’s production went down by 10.2 percent yoy to 19.4 million tons in the nine-month period.
“Not many companies can survive let alone make a profit,” Bukit Asam president director Arviyan Arifin told reporters of the financial results on Nov. 6. “We should be grateful.”
Bukit Asam’s revenue margins, like that of every other Indonesian coal miner, took a big hit this year as global demand for coal – a commodity mainly used to generate electricity – collapsed following the closure of industries and businesses amid the pandemic.
Indonesia’s benchmark coal price (HBA) was pegged at $55.71 per ton for this month, recovering from the five-year record low of $49.42 per ton in September, but still weaker than the average $77.89 per ton last year, Energy and Mineral Resources Ministry data shows.
The energy ministry expects the benchmark price to close at between $59 and $61 per ton this year and at around $66 per ton next year, which is still lower than the 2019 prices.
“This significantly thinner profitability will impel the company to impose efficiency measures, going forward,” wrote investment analyst Robertus Yanuar Hardy of Kresna Sekuritas in a note received by The Jakarta Post on Monday.
The securities firm expects Bukit Asam to end 2020 with net profits of Rp 2.19 trillion, lower than the previous estimate of Rp 2.72 trillion.
However, Robertus maintained that Bukit Asam’s shares remained attractive, recommending investors to buy.
He reasoned that, among other factors, demand for Bukit Asam’s coal was more stable than that of its competitors. The state-owned coal miner is the chief supplier for state-owned electricity monopoly PLN.
Meanwhile, Mirae Asset Sekuritas Indonesia analyst Andy Wibowo Gunawan wrote in a note published on Monday that Bukit Asam’s net profits in the first nine months of the year realized 60.4 percent and 64.1 percent of the respective full-year estimates of the securities firm and the consensus.
Andy’s note also acknowledged Bukti Asam’s coal production slump.
“However, we believe that PTBA’s coal production numbers will recover in the fourth quarter of 2020 due to the higher estimates of global coal demand,” the note reads, referring to the firm by its Indonesia Stock Exchange (IDX) code.
Meanwhile, Bukit Asam finance director Mega Satria said the company disbursed Rp 700 billion in capital expenditure (capex) as of September. Most of the capital went to developing a coal-fired power plant in South Sumatra that has reached 55.5 percent completion.
He estimated capital spending would amount to between Rp 1 trillion and Rp 2 trillion this year, lower than the initially budgeted Rp 4 trillion, as projects such as railway expansion and the power plant faced delays due to the COVID-19 virus outbreak.
Going forward, Bukit Asam’s Arviyan said that “this pandemic will still affect our business in 2021 but capex next year will still be bigger than this year because we have projects to execute.”
The Indonesian Coal Mining Association (APBI) expects global coal demand to only show a “real recovery” starting July next year as governments maintain a degree of lockdown in the first half while distributing COVID-19 vaccines.
Bukit Asam shares rose 1.01 percent in Monday’s trading close against the benchmark Jakarta Composite Index’s (JCI) rise of 0.38 percent.
Read also: Indonesian coal exporters don’t expect ‘real recovery’ until H2 next year
