PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — Adaro Energy — Investor Presentation (September 2017)
27 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, September 2017
Slide 1: Energy for Change
ENERGY FOR CHANGE 1 September 2017
Slide 2: Key questions
Key questions: • What is the outlook of the coal industry? • How was Adaro Energy’s performance in 1H17 and what is the view for FY17? • What is the progress of Adaro Energy’s projects? • What is Adaro Energy’s strategy and future plans? 2
Slide 3: Supply control to continue
Supply control to continue Coal Production (Mt) • Supply reform in China is expected to 2,500 -10% continue, targeting up to 1 Bt of excess capacity cut. FY15 • Indonesia is expected to maintain a 2,000 relatively flat production, and as its domestic FY16 requirement increase, its export will declin
Slide 4: Coal price gaining back momentum
Coal price gaining back momentum 120 750 110 700 100 650 90 600 RMB US$ 80 550 70 500 60 450 50 400 40 350 30 300 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Global Coal Newcastle (US$) QHD 5500 NAR (RMB) • Despite a better price outlook in 2017 vs 2016, uncer
Slide 5: Long term coal demand outlook remains robust
Long term coal demand outlook remains robust… Seaborne coal demand by country (Mt) Note: JKT (Japan, Korea, Taiwan); SEA (Southeast Asia); RoW (rest of the world) Source: Wood Mackenzie Thermal Trade H1 2017 Long-term Outlook • China’s share in seaborne market to decline. • Increased potential from
Slide 6: ...especially from Southeast Asia
…especially from Southeast Asia Coal capacity additions inSoutheast Asia Southeast Asia coal demand per annum Total 600 Mt Total 73 360 Mt Total 259 214 Mt 97 80 132 268 78 131 56 2013 2020 2030 Domestic Consumption (Non-Indonesia) Domestic Consumption (Indonesia) Imports Source: Adaro’s Research So
Slide 7: Quick look on Indonesia
Quick look on Indonesia Indonesia’s Coal Sales (Mt) • While Indonesia’s coal production in 2016 was relatively flat y-o-y and its export decreased ~2% 400 y-o-y… 300 • …domestic coal demand in 2016 increased ~11% y-o-y. 200 100 0 Export Domestic FY15 FY16 Indonesia’s Electricity Generation by Source
Slide 8: Performance of Adaro Energy
Performance of Adaro Energy 8
Slide 9: Resilient operational and financial results
Resilient operational and financial results OPERATIONAL 1H17 1H16 % Change Production (Mt) 25.13 25.86 -3% Sales (Mt) 25.27 27.13 -7% OB removal (Mbcm) 111.78 111.23 0% FINANCIAL (US$ millions, unless indicated) 1H17 1H16 % Change Net Revenue 1,549 1,176 32% Core Earnings 299 170 76% Operational EBI
Slide 10: Solid balance sheet and strong cash generation
Solid balance sheet and strong cash generation Net Debt Position and Leverage Ratios Cash and Free Cash Flow (million US$) 1200 2,500 2.0 1000 2,000 1.6 800 1,500 1.2 600 1,000 0.8 400 500 0.4 200 - - 2012 2013 2014 2015 2016 1H17 0 2012 2013 2014 2015 2016 Net Debt (million US$) Net Debt to Equity
Slide 11: Cost control – key in delivering strong performance
Cost control – key in delivering strong performance Adaro’s estimated coal cash cost Operational EBITDA margin breakdown (1H17) 45% Fixed overhead, 40% 5% Mining, 35% 35% - 40% Coal 30% processing, 10% 25% 20% 15% Freight & handling, 10% 20% 5% 0% Adaro PTBA ITMG Harum Shenhua Fuel, 25% - 30% Source
Slide 12: Delivering return to shareholder
Delivering return to shareholder 150 60% 50% 120 40% 90 30% 60 20% 30 10% 0 0% 2012 2013 2014 2015 2016 Dividend (million US$) Payout Ratio • Adaro has continued to pay dividend through the cyclical downturn. • Dividend payout ratio since IPO in 2008 averages ~38% and in total we have paid US$965 mi
Slide 13: Snapshot of Adaro Energy
ak wr adaro# STORY years, Snapshot of Adaro Energy :
Slide 14: Who is Adaro Energy
Who is Adaro Energy • Among the largest single-concession coal 2014A: 56.2 Mt producers in the southern hemisphere. Production 2015A: 51.5 Mt 2016A: 52.6 Mt • Top 5 thermal coal exporter globally. Sub-bituminous, medium • Major supplier to Indonesia’s domestic calorific value, ultra-low mark
Slide 15: Business model that creates sustainable value
Business model that creates sustainable value Three pillars of growth integrating pit-to-power PT Adaro Energy, Tbk (AE) *Simplified Corporate Structure Coal Mining Assets Mining Services and Logistics Power Adaro Indonesia (AI) 88.5% Saptaindra Sejati 100% Maritim Barito 100% Makmur Sejahtera 100%
Slide 16: Adaro Coal Mining Assets
Adaro Coal Mining Assets 16
Slide 17: Diversified Coal Assets Across Indonesia
Diversified Coal Assets Across Indonesia 5 Deepening Coal Product Portfolio and Set to Capitalize Assets to Support Indonesia’s Development 6 1 2 3 4 Adaro has more than 13.5 billion tonnes (Bt) of coal resources (including option to acquire 7.9 Bt) and 1.2 Bt of coal reserves. 1 2 3 4 5 6 Adaro Bal
Slide 18: Over two decades of solid production performance
Over two decades of solid production performance 60 350 2017 2016 2015 Units Guidance Actual Actual Production 300 50 Mt 52 - 54 52.5 51.5 volume Strip ratio bcm/tonne 4.85 4.45 5.19 250 Overburden removal (Mbcm) 40 Production (Mt) 200 30 150 20 100 10 50 0 0 1992 1993 1994 1995 1996 1997 1998 1999
Slide 19: Strong customer base with focus on Indonesia
Strong customer base with focus on Indonesia Geographical breakdown of Customer type by % volume (1H17) customers (1H17) USA, 4% Others, 6% 10% Spain, 4% Indonesia, 23% India, 6% Hong Kong, 7% Malaysia, 14% Power Taiwan, 7% China, 11% Others 90% South Korea, 8% Japan, 10% * Others include cement, pu
Slide 20: Snapshot of Adaro MetCoal Companies (AMC)
Snapshot of 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 $120 million for 75% of the properties. Adaro now owns 100% of the asset. • First coal production has started at the Haj
Slide 21: Adaro Mining Services and Logistics
Adaro Mining Services and Logistics 21
Slide 22: Ensuring operational excellence
Ensuring operational excellence Strengthens Adaro’s Earnings Profile as Contribution to Parent Co Increases • Key part of our vertical integration. • Ensures operational excellence, productivity improvement and timely reliable delivery to customers. • Non coal mining business accounted for 31% of Ad
Slide 23: Adaro Power
Adaro Power 23
Slide 24: Building the foundation of Adaro's future
Building the foundation of Adaro’s future Bhimasena Power Indonesia Tanjung Power Indonesia Capacity 2x1000 MW 2x100 MW Stake 34% 65% Acquired Partner(s) J-Power (34%), Itochu (32%) Korea EWP (35%) Location Central Java South Kalimantan • Signed 25 years PPA with PLN • Signed PPA with PLN • Total Ca
Slide 25: Adaro Energy 2017 guidance
Adaro Energy 2017 guidance Coal production (Mt) Consolidated planned strip ratio (bcm/t) 56.2 7 52.3 52 - 54 5.6 5.7 52.5 5.2 51.5 4.85 4.5 47.2 2012A 2013A 2014A 2015A 2016A 2017F 2012A 2013A 2014A 2015A 2016A 2017F Operational EBITDA (US$ billions) Capital expenditure (US$ million) 1.1 0.9 – 1.1 4
Slide 26: Conclusions and takeaways
Conclusions and takeaways • Coal market is poised to reach supply and demand balance. • Indonesia to lessen coal export and focus on the domestic market. • Coal production capped to 400 Mtpa in 2019. • Long term fundamental for coal remains promising. - Indonesia, Southeast Asia and India will be th
Slide 27: Thank you
Thank you 27 This presentation is also available at http://www.adaro.com/pages/read/10/45/Presentation
Adaro Energy — Investor Presentation (September 2017) on 6ix