ITMG's profit plummets 58%, company warns of coal price risk

Jakarta,- Coal issuer PT Indo Tambangraya Megah Tbk (ITMG) experienced a 58.30% decline in net profit throughout 2023.

Referring to its financial statements, the company's profit as of December 2023 was recorded at US$ 500.33 million or equivalent to IDR 7.81 trillion. While in 2022, the company posted a profit of US$ 1.2 billion or IDR 18.75 trillion.

In terms of top line, the company posted revenue of US$ 2.37 billion. This figure is down 35% compared to 2022 of US$ 3.63 billion. Meanwhile, the cost of goods sold only fell 6.32% to US$ 1.63 billion, from US$ 1.74 billion in 2022.

The cost of goods sold only fell slightly even though revenue fell sharply, becoming the main ballast for ITMG's net profit. As is known, coal prices have been in freefall in the past year, with demand slowing again after the European energy crisis eased.

Through its official statement, the decline in revenue was due to the decline in the average selling price of coal. On an annualized basis, sales volume rose by 11% on the back of a 1% increase in production, but was offset by a 41% decline in average selling price (ASP), from $192/ton in FY22 to $113/ton in FY23.

The company also warned of the risk of further decline in coal prices that could affect the company's performance.

"Fluctuations in coal prices will significantly affect the Group's overall earnings. To mitigate this risk, the Group may enter into coal swap derivative contracts to hedge future sales against coal price fluctuations with a maximum derivative value of 8,000,000 tons with a maximum term of three years," management said in its latest financial report.

The company's asset value position at the end of this year was recorded at US$ 2.18 billion. The assets decreased compared to the position at the end of December 2022 of US$ 2.64 billion.

Meanwhile, ITMG's liabilities amounted to US$ 399.07 million. This liability experienced a considerable change of 42.1% from last year.

"There was an increase in bank loans from US$ 26 million at the end of 2022 to US$ 48 million at the end of 2023 which had an impact on increasing the debt to equity ratio from 0.01 to 0.03," said ITMG management, quoted on Thursday (22/2/2024).

Sources : Feb 22.24

in Coal
Government Releases Coal Price Reference for February 2024