Coal news and updates

Weaker coal prices hit Adaro’s revenues

Adaro Energy, Indonesia’s second-biggest coal producer, booked a 47 percent decline in net income in the first nine months of this year, with lower costs and higher sales unable to offset weaker coal prices.

Adaro’s net income dipped to $183 million in the January-to-September period from $346 million in the corresponding period last year.

The company reported it had managed to reduce the cost of goods sold in the period to $1.87 billion from $1.89 billion last year. Meanwhile, its sales volume rose 13 percent to 39.1 million metric tons.

Devindra Ratzarwin, Adaro’s corporate secretary, said in a statement that besides lowering production costs by 9 percent to $34.68 per ton, Adaro also lowered its capital expenditure by 71 percent to $120 million from $423 million.

However, Devindra said that “with the current condition where thermal coal was experiencing oversupply in the first nine months, the market for coal remains difficult and the price was lower than expected.”

The price of coal has fallen 16.4 percent to $83.16 a ton this year, according to data from the World Bank’s Global Economic Monitor on Commodities, amid slowing Chinese imports and excess supply from global producers.

Weak prices and the demand for Indonesian commodities including coal has put the country’s trade balance in the red.

Although Indonesia posted a narrower trade deficit in the July-September period from the previous quarter, the trade balance on a monthly basis in September swung to a deficit of $660 million after a surplus of a revised $71 million in August. The trade deficit had reached a record high of $2.3 billion in July.

Despite a profit slump, Adaro president director Boy Garibaldi Thohir remained upbeat on the company’s future.

“Adaro is in the right position to create maximum sustainable value from Indonesian coal,” said Boy, the older brother of Erick Thohir, who just recently purchased world-famous football club Inter Milan.

“We believe the long-term fundamentals for coal remain robust, supported by strong demand in the Asia-Pacific region,” he added.

There are five majority shareholders in Adaro: Theodore Rachmat, the Thohir family, Benny Subianto, Edwin Soeryadjaya, and Sandiaga Salahudin Uno.

Adaro also plans to invest in power plant projects to tap the rising electricity demand in Indonesia, which will lead to higher demand for coal.

Source: jakrata Globe