PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (July 2016)
32 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, July 2016
Slide 1: Delivering Energy to Build the Nation
DELIVERING ENERGY TO BUILD THE NATION July 2016 www.adaro.com
Slide 2: Disclaimer
Disclaimer These materials have been prepared by PT Adaro Energy (the “Company”) and have not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained
Slide 3: Snapshot of Adaro Energy
Snapshot of Adaro Energy 3
Slide 4: Adaro Energy Highlights
Adaro Energy Highlights • Among the largest single-concession coal 2013A: 52.3 Mt producers in the southern hemisphere Production 2014A: 56.2 Mt 2015A: 51.5 Mt • Top 5 thermal coal exporter globally Sub-bituminous, medium calorific value, • Major supplier to domestic markets Envirocoal ultra
Slide 5: Building our competitive advantage
Building our competitive advantage • We have more than 20 years experience of successful coal mining operations in Indonesia. In June 2005, our majority shareholders acquired Adaro through an LBO which entailed debt funding of US$923 million and equity of US$50 million. • After the LBO we started to
Slide 6: Creating sustainable value
Creating sustainable value Three engines of growth integrating pit-to-power Adaro Energy (AE) Coal Mining Assets Mining Services and Logistics Power Adaro Indonesia (AI) 100% Saptaindra Sejati (SIS) 100% Maritim Barito 100% Makmur Sejahtera Wisesa 100% Coal mining, S Kalimantan Coal mining and hauli
Slide 7: Operational and financial highlights
Operational and financial highlights OPERATIONAL 1Q 2016 1Q 2015 % Change Production (Mt) 12.64 13.16 -4% Sales (Mt) 13.47 13.45 0% OB removal (Mbcm) 53.58 62.10 -14% FINANCIAL (US$ millions, unless indicated) 1Q 2016 1Q 2015 % Change Net Revenue 588 711 -18% Core Earnings 81 77 5% Net Income 61 59
Slide 8: Coal production guidance
Coal production guidance Production Volumes (Mt) • Production guidance for 2016 is 56.2 52Mt to 54Mt, a slight increase over 2015. 52 - 54 52.3 51.5 • Due to prolonged pressure on coal prices, we lowered our production 47.7 47.2 volume by 4.7Mt in 2015, down 9% from previous year. 2011A 2012A 2013A
Slide 9: Cost discipline while maintaining long-term plan
Cost discipline while maintaining long-term plan • We own or control each part of our vertically integrated coal supply chain, Consolidated Planned Strip Ratio (bcm/t) which enables us to better control cost. 7 6.3 5.6 5.7 5.2 4.71 • Our investment in overburden removal made during the good times pr
Slide 10: Solid profitability despite market downturn
Solid profitability despite market downturn Operational EBITDA (US$ billions) • Our low-cost operations enable us to generate healthy Operational EBITDA 1.5 and maintain a solid Operational EBITDA margin despite falling coal price. 1.1 0.9 0.8 0.7 0.45-0.7 • We achieved our 2015 Operational EBITDA t
Slide 11: Investing in the three engines of growth
Investing in the three engines of growth Capital Expenditure (US$ million) • Capex reduction is not at the expense of our growth. • We made the investment in our mining asset, 625 heavy equipment and infrastructure back in 490 2010-12. • Heavy equipment capacity at Adaro Indonesia is ~60Mtpa. We are
Slide 12: Cost control: key in delivering strong performance
Cost control: key in delivering strong performance EBITDA Margin Adaro’s Estimated Coal Cash Cost Breakdown (1Q16) Fixed overhead, Mining, 34.2% 5% Coal 35% - 40% processing, 27.2% 10% 23.2% 19.9% 16.2% Freight & 6.7% handling, 20% ITMG Banpu Harum Adaro PTBA Shenhua Fuel, 25% - 30% Source: Bloomber
Slide 13: Adaro Coal Mining
Adaro Coal Mining 13
Slide 14: Adaro Energy Mining Assets
Adaro Energy Mining Assets 5 6 Adaro has 12 billion tonnes (Bt) of coal resources (including option to acquire 7.9 Bt) and 1.1 Bt of coal reserves. 1 2 3 4 Note: Reserves and 1 2 3 4 5 6 Resources numbers above are before Adaro Indonesia: Balangan: MIP: 75% stake BEE: 61.04% BEP: 10.22% IMC: 100% ta
Slide 15: Diversified customer base
Diversified customer base Customer type by % volume (1Q16) Geographical breakdown of customers (1Q16) Others, 11% 10% Indonesia, Spain, 6% 24% Malaysia, 7% Power South Korea, 8% India, 14% Others Japan, 8% 89% Hong Kong, China, 10% 13% * Others include cement, pulp & paper, and * Others include Thai
Slide 16: Good record of production performance
Good record of production performance 2016 2015 2014 60 Units 350 Guidance Actual Actual Production volume Mt 52 - 54 51.5 56.2 300 50 AI – Tutupan Mt 41.97 43.53 AI – Paringin Mt 5.41 6.08 AI – Wara Mt 2.97 5.71 250 Overburden removal (Mbcm) Semesta Centramas Mt 1.11 0.89 40 Strip ratio bcm/tonne 4
Slide 17: Our Reliable Coal Supply Chain
Our Reliable Coal Supply Chain Most of Adaro's coal come from the deposits in South Kalimantan mined by AI. The physical mining and transporting of coal to customers is done by contractors appointed by AI. We tightly control this coal supply chain by using a subsidiary company at each stage as one o
Slide 18: Acquisition of Balangan IUPs
Acquisition of Balangan IUPs JORC Compliant Coal Resources and Reserves (Millions of ROM Tonnes) Total Ash % Total Sulfur % Calorific Value (kcal/kg, Total (Mt) Moisture % (GAR) (GAR) GAR) Reserves 140 24 2.8 0.08 4,436 • Purchased 75% of the three IUPs for US$30.4 million enterprise value in 1Q13.
Slide 19: Adaro Metallurgical Coal
Adaro Metallurgical Coal Indomet Coal Project (IMC) in Central and East Kalimantan • On 6th June 2016, Adaro Energy entered into Share Sale Agreements with BHP companies with the purpose to purchase and assign all shares in 7 CCOW’s in Central and East Kalimantan • The transaction value was $120 mil
Slide 20: Adaro Mining Services and Logistics
Adaro Mining Services and Logistics 20
Slide 21: Snapshots
Snapshots • Key part of our vertical integration. • Ensures operational excellence, productivity improvement and timely reliable delivery to customers. • We expect growing contribution from the non coal mining part of our business. • Non coal mining contributed 42% of Adaro Energy EBITDA in 2015. •
Slide 22: Mining services and logistics highlights
Mining services and logistics highlights* Name Highlights PT Saptaindra Sejati (SIS) • One of Indonesia’s leading mining contractors. • FY15 overburden removal volume: 150.7Mbcm. • FY15 coal production volume: 29.5Mt. PT Maritim Barito Perkasa • 64 sets of tugs and barges used by Adaro with average
Slide 23: Adaro Power
Adaro Power MSW’s 2x30 MW mine- mouth power plant in Tanjung, South Kalimantan 23
Slide 24: Building Adaro Power
Building Adaro Power • Commercially and financially attractive with solid IRR and low-cost long-term project financing. • Creates a new captive market and helps meet our domestic market obligation. • Helps to lessen volatility in Adaro’s business model. • Contributes to the development of Indonesia’
Slide 25: Adaro Power's current projects
Adaro Power’s current projects Diversify and secure predictable long-term coal demand Bhimasena Power Indonesia Tanjung Power Indonesia East Kalimantan Power Project Capacity 2x1000 MW 2x100 MW 2x300 MW Stake Acquired 34% 65% 49% Partner(s) J-Power (34%), Itochu (32%) Korea EWP (35%) Shenhua Oversea
Slide 26: Industry Update
Industry Update 26
Slide 27: Coal prices hit by China market and chronic oversupply
Coal prices hit by China market and chronic oversupply 100.00 700.00 90.00 650.00 600.00 80.00 550.00 70.00 500.00 60.00 450.00 50.00 400.00 40.00 350.00 30.00 300.00 Dec-13 Dec-14 Dec-15 Jun-13 Jun-14 Jun-15 Jun-16 Apr-13 May-13 Apr-14 May-14 Apr-15 May-15 Apr-16 May-16 Oct-13 Oct-14 Oct-15 Jan-13
Slide 28: Market Update – Prices in July 2016
Market Update – Prices in July 2016 Month-to-Date Year-to-Date Year-on- • The decline of oil prices and 08 Jul 2016 % YoY Average Average Year depreciation of key currencies Bituminous (US$/Tonne) against the USD kept global thermal coal prices from major Global Coal Newcastle 60.11 58.30 51.47 (10.
Slide 29: Falling coal cash cost supports production
Falling coal cash cost supports production Seaborne thermal coal cash cost (CV adjusted) 2015 Cost change (%) Source: Wood Mackenzie, Dataset: November 2015, “Nominal terms” Cost reductions are more apparent for countries with costs in local currencies. Thus several coal producers are still able to
Slide 30: Robust long-term outlook
Robust long-term outlook • Global thermal coal markets will continue to be driven by electrification in the developing world, where scalable and economic alternatives are limited. Coal imports remain weak in the near-term but appear to be possibly stronger post-2020. • India overtook China as larges
Slide 31: Fueling Southeast Asia's coal requirements
Fueling Southeast Asia’s coal requirements Coal capacity additions in Southeast Asia Southeast Asia coal demand Total 600 Mt 73 Total 360 Mt 259 Total 97 214 Mt 80 132 268 78 131 56 2013 2020 2030 Domestic Consumption (Non-Indonesia) Domestic Consumption (Indonesia) Source: WoodMackenzie Energy Mark
Slide 32: Thank You
THANK YOU www.adaro.com 32 This presentation is also available at www.adaro.com/investing/investor-presentations-and-events-calendar/