PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (November 2019)
37 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, November 2019
Slide 1: PT Adaro Energy Tbk
PT ADARO ENERGY TBK November 2019
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: Key questions
Key questions: • What are the recent trends in coal market and coal price? • What is the progress of Adaro’s projects? • How will your strategy to diversify the business model benefit Adaro? • What is Adaro’s approach to ESG? 2
Slide 4: Price performance of different thermal coal types
Price performance of different thermal coal types 140 750 700 120 650 100 600 80 550 US$ RMB 60 500 450 40 400 20 350 0 300 May-15 Mar-14 May-14 Mar-15 Mar-16 May-16 Mar-17 May-17 Mar-18 May-18 Nov-18 Mar-19 May-19 Jan-14 Nov-14 Jan-15 Nov-15 Jan-16 Nov-16 Jan-17 Nov-17 Jan-18 Jan-19 Nov-19 Jul-14 S
Slide 5: Positive demand outlook for thermal coal
Positive demand outlook for thermal coal • As China’s dominant role in the Seaborne thermal coal demand by region (Mt) seaborne market gradually cedes, Southeast Asia and South Asia will become the key drivers. Electrification in the developing world continues to drive coal demand. • Global seaborne
Slide 6: Resilient outlook for metallurgical coal
Resilient outlook for metallurgical coal Supply: Seaborne traded metallurgical coal (Mt) Demand: Global metallurgical coal imports (Mt) Source: Wood Mackenzie, Global metallurgical coal long-term outlook H1 2019: Walking the tightrope: Can India provide balance as China transitions • As steel produc
Slide 7: Performance of Adaro Energy
Performance of Adaro Energy 6
Slide 8: Solid operational and financial results
Solid operational and financial results OPERATIONAL 9M19 9M18 % Change Production (Mt) 44.13 38.98 13% Sales (Mt) 44.66 39.27 14% OB removal (Mbcm) 210.04 204.36 3% FINANCIAL (US$ millions, unless indicated) 9M19 9M18 % Change Net Revenue 2,654 2,667 0% Core Earnings 513 526 -2% Operational EBITDA 9
Slide 9: Solid balance sheet and strong cash generation
Solid balance sheet and strong cash generation Reduced debt and improved financial position Strong cash balance and free cash flow generation 1,400 1.6 1,400 1,200 1,200 1.2 1,000 1,000 800 800 0.8 600 600 0.4 400 400 200 200 0.0 net cash 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 -200 -0
Slide 10: Cost control – key in delivering strong performance
Cost control – key in delivering strong performance Adaro’s estimated coal cash cost breakdown Operational EBITDA margin (9M19) 45% Fixed overhead, Mining, 40% 5% 35% - 40% 35% Coal processing, 30% 10% 25% 20% Freight & 15% handling, 20% 10% 5% 0% Harum PTBA Shenhua Adaro ITMG Fuel, 25% - 30% Source
Slide 11: Delivering shareholder's return
Delivering shareholder’s return 270 60% 240 48% 50% 210 180 40% 150 30% 120 90 20% 60 10% 30 0 0% 2014 2015 2016 2017 2018 Dividend (million US$) Dividend Payout Ratio • We are committed to deliver return to our shareholders through consistent dividend payment. • Dividend payout ratio since IPO in 2
Slide 12: Snapshot of Adaro Energy
Snapshot of Adaro Energy 11
Slide 13: Creating maximum sustainable value
Creating maximum sustainable value Strategy Action Plan Organic growth from Production ramp up from non AI's production to stay flat and current reserve base AI mines and mine planning production growth from other mines Implementation of GPS Chip sealing of hauling road, Focus on improving tracking,
Slide 14: Resilient integrated business model
Resilient integrated business model PT Adaro Energy Tbk (AE)1 1) Simplified Corporate Structure Adaro Mining Adaro Services Adaro Logistics Adaro Power Adaro Indonesia (AI) 88.5% Saptaindra Sejati 100% Maritim Barito 100% Makmur Sejahtera 100% South Kalimantan (SIS) Perkasa (MBP) Wisesa (MSW) Balang
Slide 15: Eight business pillars – diversifying beyond coal
Eight business pillars – diversifying beyond coal • Adaro Energy is well aware of the cyclical nature of the coal industry and its impact to our business. Therefore we are diversifying our business model beyond coal mining and currently operates under eight business pillars. • Adaro Energy has subsi
Slide 16: Adaro Mining
Adaro Mining 15
Slide 17: Performance in 9M19
Performance in 9M19 Units 9M19 9M18 9M19 vs. 9M18 Coal Production Mt 44.13 38.98 13% Sales Volume Mt 44.66 39.27 14% Overburden Removal Mbcm 210.04 204.36 3% Strip Ratio x 4.76 5.24 -9% • We posted an 13% y-o-y increase in coal production to 44.13 Mt as a result of strong operational performance and
Slide 18: Large coal reserves and diverse portfolio of coal products
Large coal reserves and diverse portfolio of coal products 1 Adaro Indonesia: Balangan Coal 2 Adaro MetCoal 3 4 BEE: 61.04% 5 MIP: 75% stake 88.5% Companies: Companies S Sumatra stake S Sumatra Existing, S Kalimantan Central and East sub-bituminous sub-bituminous S Kalimantan sub-bituminous Kalimant
Slide 19: Adaro Energy's integrated coal supply chain
Adaro Energy’s integrated 9 coal supply chain Adaro Energy’s main thermal coal mines are located in South Kalimantan, and account for the majority of Adaro Group’s coal production. Adaro Indonesia and other key subsidiaries form the main part of the coal supply chain with help from third-party contr
Slide 20: Over two decades of solid production performance
Over two decades of solid production performance 60 350 2019 2018 2017 300 50 Units Guidance Actual Actual Production Mt 54 – 56 54.04 51.8 volume 250 Overburden Removal (Mbcm) 40 Strip ratio bcm/tonne 4.56 5.06 4.61 Production (Mt) 200 30 150 20 100 10 50 0 0 199219931994199519961997199819992000200
Slide 21: Strong customer base with focus on Emerging Asia
Strong customer base with focus on Emerging Asia Customer type by volume (9M19) Geographical breakdown of customers (9M19) Others**, China, 4% 10% 13% India, 14% Southeast Asia, 40% Power Others 90% East Asia*, 29% * Others include cement, pulp & paper, and industrial * Excluding China ** Others EU
Slide 22: Envirocoal – a positive energy
Envirocoal – a positive energy Ash content: 2%-3% (adb) Nitrogen content : 0.9% - Sulfur content: 0.1% - 1.0% (daf) 0.25% (adb) • Lowest ash content among coals • Envirocoal is amongst the 10 lowest • Envirocoal’s ultra low sulfur content produced for global export trade, coals by nitrogen content.
Slide 23: Coking coal: Adaro MetCoal Companies (AMC)
Coking coal: Adaro MetCoal Companies (AMC) • Adaro Energy completed the acquisition of AMC from BHP Billiton for 7 CCOWs in Central and East Kalimantan in 2016. • The transaction value was $120 million for 75% of the properties. Adaro now owns 100% of the asset. • In 2018, AMC produced 1.01 Mt of co
Slide 24: Coking coal: Kestrel Coal Mine
Coking coal: Kestrel Coal Mine • EMR Capital and Adaro Energy completed the acquisition of Rio Tinto’s 80% interest in the Kestrel Coal Mine (Kestrel) on August 1st, 2018. • Kestrel produces high volatile, high fluidity coking coal and recorded saleable coal production of 4.76 Mt in 2018. • Since th
Slide 25: Adaro Services and Adaro Logistics
Adaro Services and Adaro Logistics 24
Slide 26: Ensuring operational excellence
Ensuring operational excellence Strengthens Adaro’s Earnings Profile as Contribution to Parent Co Increases • Key part of our vertical integration. • Ensures operational excellence, productivity improvement and timely reliable delivery to customers. • Non coal mining business accounted for 45% of Ad
Slide 27: Adaro Power
Adaro Power 26
Slide 28: Building the foundation of Adaro's future
Building the foundation of Adaro’s future Bhimasena Power Indonesia Tanjung Power Indonesia Capacity 2x1000 MW 2x100 MW Stake 34% 65% Acquired Partner(s) J-Power (34%), Itochu (32%) Korea EWP (35%) Location Central Java South Kalimantan • Signed 25 years PPA with PLN • Signed PPA with PLN • Total Ca
Slide 29: Our Green Initiatives
Our Green Initiatives 28
Slide 30: Balance of People, Planet & Profit
Balance of People,Planet & Profit • We strive to balance our responsibilities among the generation of profit, the utilization of planet and employment of people. • Our corporate social responsibility programs focus on five main areas: education, economic development, health, environmental enhancemen
Slide 31: Delivering beyond compliance
Delivering beyond compliance Biodiesel plant initiatives Water treatment facilities Adaro is a pioneer and the only mining Adaro is a pioneer in processing waste water company to own a biodiesel plant. from mining activities into clean potable water. Launched in May 2011, this facility We then distr
Slide 32: Did you know? Ultra-Super Critical technology
Did you know? The benefits of Ultra-Super Critical technology Higher efficiency Lower pollution and emission USC steam conditions provide more USC utilizes low NOx burner in fuel than 10% higher thermal efficiency combustion process, fabric filter and compared to subcritical technology. FGD (Flue-Ga
Slide 33: Adaro Energy 2019 guidance
Adaro Energy 2019 guidance Coal production (Mt) Consolidated planned strip ratio (bcm/t) 56.2 5.7 54 - 56 5.2 5.06 4.6 4.56 54.04 4.5 52.5 51.5 51.8 2014A 2015A 2016A 2017A 2018A 2019F 2014A 2015A 2016A 2017A 2018A 2019F Operational EBITDA (US$ billions) Capital expenditure (US$ million) 1.4 450 – 6
Slide 34: Conclusions and takeaways
Conclusions and takeaways • Cautiously optimistic in the near term. • Business model is resilient to withstand cyclicality. • Non-coal contribution buffers against volatility in the coal market. • Long term fundamentals for coal remains promising. - Indonesia, Southeast Asia and South Asia will be t
Slide 35: Conclusions and takeaways
Conclusions and takeaways • Our eight business pillars is geared up to take more opportunities. - Multiple opportunities across the value chain. - Each engine of growth is expected to grow along with the growth of coal fired power generations in Indonesia and Southeast Asia. 34
Slide 36: www.adaro.com
Visit our website at: www.adaro.com Our annual report is available for download here: 35
Slide 37: Thank you
Thank you This presentation is also available at http://www.adaro.com/pages/read/10/45/Presentation
PT Adaro Energy — Investor Presentation (November 2019) on 6ix