Indonesian coal company Adaro Energy recorded a 16% fall in revenues from its coal mining and trading activities in 1H16, as the average selling price for its coal fell 17%. Lower production costs enabled the company to increase in coal business profit, however, by 15% to US$134 million.
The company sold 17.1 million t over the period – flat with 1H15. Coal production was 25.9 million t, keeping the company on track to hit the lower end of its 2016 target of 52 – 54 million t.
Cost of revenue fell, however, by 21% as the company benefited from lower strip ratios and good operational productivity.
In addition, the company said it had hedged 30% of its fuel requirements – the most significant cost item at Indonesia’s truck-reliant coal mines – for the rest of year at well below its 2016 budget.
The company was also positive on future demand.
“We are pleased to see the recent improvement in thermal coal market dynamics on the back of supply rationalisation in major coal producing countries and sustained demand,” said Adaro’s President Director and CEO, Garibaldi Thohir.
“We continue to believe the current market downturn is cyclical and that the long-term fundamentals for coal remain intact. We are optimistic with the prospect from Indonesia and other Southeast Asian countries as these countries will continue to depend on coal to fuel their surging energy needs to achieve stronger economic growth.”
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/06092016/adaro-remains-positive-despite-revenue-fall-2016-2378/