PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (January 2019)
40 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, January 2019
Slide 1: PT Adaro Energy Tbk
PT ADARO ENERGY TBK January 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: • Recent trends in coal price? • What is Adaro’s long-term strategy? • Why venture overseas? • Should investors expect more M&A activities? • What is Adaro’s approach to ESG? 2
Slide 4: Varying price performance across thermal coal types
Varying price performance across thermal coal types 140 750 700 120 650 100 600 80 550 RMB US$ 60 500 450 40 400 20 350 0 300 Global Coal Newcastle (US$) ICI 3 (US$) ICI 4 (US$) QHD 5500 NAR (RMB) • Increased supply of sub-bituminous and off-spec coal, and the limited supply of Newcastle spec coal h
Slide 5: Production cost has increased
Production cost has increased Average seaborne export thermal cash costs and margin Source: Wood Mackenzie, Global thermal coal long-term outlook H1 2018: navigating through the energy transition • Inevitable cost increase as coal miners are trying to reverse the consequences of the prolonged indust
Slide 6: Positive demand outlook for thermal coal
Positive demand outlook for thermal coal Seaborne thermal coal demand by region (Mt) • Seaborne thermal coal demand is estimated to increase to approximately 983 Mt in 2018 (Wood Mackenzie). • As China’s dominant role in the seaborne market gradually cedes, Southeast Asia and India will become the k
Slide 7: …from both power and non power
…from both power and non power Global thermal coal demand for power (Mt) Global thermal coal demand for non-power (Mt) Source: Wood Mackenzie, Global thermal coal long-term outlook H1 2018: navigating through the energy transition • Electrification in the developing world continues to drive coal dem
Slide 8: 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 thermal coal long-term outlook H1 2018: navigating through the energy transition • As steel production and consumption continue to gr
Slide 9: …driven by firm steel demand
…driven by firm steel demand World crude steel production 2008-2017 (Mt) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: World Steel in Figures 2018, World Steel Association • Steel production is expected to continue its modest growth due to
Slide 10: Performance of Adaro Energy
Performance of Adaro Energy 10
Slide 11: Solid operational and financial results
Solid operational and financial results OPERATIONAL 9M18 9M17 % Change Production (Mt) 38.97 39.36 -1% Sales (Mt) 39.27 39.44 0% OB removal (Mbcm) 204.36 183.17 12% FINANCIAL (US$ millions, unless indicated) 9M18 9M17 % Change Net Revenue 2,667 2,439 9% Core Earnings 527 495 6% Operational EBITDA 1,
Slide 12: Solid balance sheet and strong cash generation
Solid balance sheet and strong cash generation Strong cash balance and free cash flow Reduced debt and improved financial position generation 1,400 1.6 1,400 1,200 1,200 1.2 1,000 1,000 800 800 0.8 600 600 net 0.4 400 cash 400 200 200 0.0 0 0 2014 2015 2016 2017 9M18 2014 2015 2016 2017 9M18 -200 -0
Slide 13: Cost control – key in delivering strong performance
Cost control – key in delivering strong performance Adaro’s estimated coal cash cost breakdown Operational EBITDA margin (9M18) 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 14: Delivering shareholder's return
Delivering shareholder’s return 51.75 % 270 60% 240 50% 210 180 40% 150 30% 120 90 20% 60 10% 30 0 0% 2013 2014 2015 2016 2017 Dividend (million US$) Payout Ratio (%) • We are committed to deliver return to our shareholders through consistent dividend payment. • Dividend payout ratio since IPO in 20
Slide 15: Snapshot of Adaro Energy
Snapshot of Adaro Energy 15
Slide 16: 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 17: 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 18: 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 19: Adaro Mining
Adaro Mining 19
Slide 20: Performance in 9M18
Performance in 9M18 Units 9M18 9M17 9M18 vs 9M17 Coal Production Mt 38.98 39.36 -1% Sales Volume Mt 39.27 39.44 0% Overburden Removal Mbcm 204.36 183.17 12% Strip Ratio x 5.24 4.65 12% • Dry weather in 3Q18 supported stronger operations activities and we were able to deliver higher overburden remova
Slide 21: 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 22: 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 23: Over two decades of solid production performance
Over two decades of solid production performance Adaro’s historical production 60 350 2018 2017 2016 Units Guidance Actual Actual 300 50 Production Mt 54 – 56 51.8 52.6 volume Overburden Removal (Mbcm) 250 40 Strip ratio bcm/tonne 4.9 4.61 4.45 Production (Mt) 200 30 150 20 100 10 50 0 0 1996 2011 1
Slide 24: Strong customer base with focus on Emerging Asia
Strong customer base with focus on Emerging Asia Customer type by volume (9M18) Geographical breakdown of customers (9M18) Others**, 10% China, 5% 13% Southeast India, 13% Asia, 38% Power Others 90% East Asia*, 31% * Others include cement, pulp & paper, and industrial * Excluding China ** Others inc
Slide 25: 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 26: 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. • The transaction value was $120 million for 75% of the properties. Adaro now owns 100% of the asset. • First coal production has started at the Ha
Slide 27: 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. • Adaro Energy’s first coal mining operations overseas. • Kestrel is located 40 km north of Emerald in the Bowen Basin coal fiel
Slide 28: Adaro Services and Adaro Logistics
Adaro Services and Adaro Logistics 28
Slide 29: 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 20% of Ad
Slide 30: Adaro Power
Adaro Power 30
Slide 31: 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 32: Our Green Initiatives
Our Green Initiatives 32
Slide 33: 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 enhanceme
Slide 34: 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 35: Did you know?
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 36: Adaro Energy 2018 guidance
Adaro Energy 2018 guidance Coal production (Mt) Consolidated planned strip ratio (bcm/t) 56.2 5.6 5.7 54 - 56 5.2 4.9 4.6 4.5 52.3 52.5 51.5 51.8 2013A 2014A 2015A 2016A 2017A 2018F 2013A 2014A 2015A 2016A 2017A 2018F Operational EBITDA (US$ billions) Capital expenditure (US$ million) 750 – 900 1.3
Slide 37: Conclusions and takeaways
Conclusions and takeaways • Coal market is relatively balanced. • Long term fundamentals for coal remains promising. - Indonesia, Southeast Asia and India will be the main demand drivers. • Adaro offers a complete portfolio of coal from low CV thermal coal to premium hard coking coal, providing us w
Slide 38: Conclusions and takeaways
Conclusions and takeaways • Our resilient business model with 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
Slide 39: www.adaro.com
Visit our website at: www.adaro.com Our annual report is available for download here: 39
Slide 40: Thank you
Thank you This presentation is also available at http://www.adaro.com/pages/read/10/45/Presentation
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