PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (October 2018)
33 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, October 2018
Slide 1: Energy for Change
ENERGY FOR CHANGE 1 October 2018
Slide 2: Key questions
Key questions: • Why has coal price remain high and will it stay high for longer? • What is Adaro’s rationale for venturing overseas? • Should investors expect more M&A activities? • What is Adaro strategy to ensure a sustainable business? 2
Slide 3: Thermal coal: robust price momentum continues
Thermal coal: robust price momentum continues 130 750 120 700 110 650 100 600 90 550 RMB 80 US$ 500 70 450 60 400 50 40 350 30 300 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 May-16 May-13 May-14 May-15 May-17 May-18 Sep-13 Sep-17 Jan-13 Mar-13 Jan-14 Mar-14 Jan-15 Mar-15 Jan-16 Mar-16 Jan-17 Mar-17 Jan-18 M
Slide 4: Market is relatively balanced
Market is relatively balanced Supply – lagged and Demand – resilient and positive structurally changing outlook supported by emerging Asia • Under-investment: expansionary • Improved economic activities in capex has been minimal despite China and India. higher prices. • Weather related issues. • Inc
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 • The higher coal price has created greater headroom for cost. • Increase in cost is inevitable as coal
Slide 6: Positive demand outlook for thermal coal
Positive demand outlook for thermal coal Seaborne thermal coal demand by region (Mt) • As China’s dominant role in the seaborne market gradually cedes, Southeast Asia and India will become the key drivers. • It is estimated that global seaborne thermal coal demand will grow modestly to reach 1.1 Bt
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 de
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 1H18 1H17 % Change Production (Mt) 24.06 25.13 -4% Sales (Mt) 23.81 25.27 -6% OB removal (Mbcm) 123.01 111.78 10% FINANCIAL (US$ millions, unless indicated) 1H18 1H17 % Change Net Revenue 1,610 1,549 4% Core Earnings 269 299 -10% Operational EBITDA
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 1400 1,200 1200 1.2 1,000 1000 800 0.8 800 600 600 0.4 400 400 200 0.0 200 0 2014 2015 2016 2017 1H18 0 -200 -0.4 2014 2015 2016 2017 1H18 Net debt
Slide 13: Cost control – key in delivering strong performance
Cost control – key in delivering strong performance Adaro’s estimated coal cash cost breakdown (1H18) Operational EBITDA margin 45% 40% Fixed overhead, Mining, 35% 5% 35% - 40% 30% Coal 25% processing, 10% 20% 15% Freight & 10% handling, 5% 20% 0% Harum PTBA Adaro Shenhua ITMG Fuel, 25% - 30% Source
Slide 14: Delivering return to shareholder
Delivering return to shareholder 270 51.75 % 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 deliver return to our shareholder through consistent dividend payment. • Dividend payout ratio since IPO in 2008
Slide 15: Snapshot of Adaro Energy
ak wr adaro# STORY years, Snapshot of Adaro Energy :
Slide 16: Business model that creates sustainable value
Business model that creates sustainable value PT Adaro Energy Tbk (AE) *Simplified Corporate Structure Adaro Mining Adaro Mining Adaro Logistics Power Services Adaro Indonesia (AI) 88.5% Saptaindra Sejati 100% Maritim Barito 100% Makmur Sejahtera 100% South Kalimantan (SIS) Perkasa (MBP) Wisesa (MSW
Slide 17: 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. • AE has subsidiaries wi
Slide 18: Adaro Mining
Adaro Mining 18
Slide 19: Large coal reserves and diverse portfolio of coal products
Large coal reserves and diverse portfolio of coal products 5 Adaro MetCoal Companies Central and East BEP: 10.22% 6 Kalimantan stake with Metallurgical coal option to acquire Resources 1.27Bt 90% E Kalimantan sub-bituminous Resources 7.9Bt MIP: 75% stake 1 S Sumatra 4 sub-bituminous Balangan Coal Re
Slide 20: Adaro Energy’s integrated coal supply chain
Adaro Energy’s integrated 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 contrac
Slide 21: 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 Production 300 50 Mt 54 – 56 51.8 52.6 volume Overburden Removal (Mbcm) Strip ratio bcm/tonne 4.9 4.61 4.45 250 40 Production (Mt) 200 30 150 20 100 10 50 0 0 1998 2010 1
Slide 22: Strong customer base with focus on Indonesia
Strong customer base with focus on Indonesia Customer type by volume (1H18) Geographical breakdown of customers (1H18) Philippines, Others, 3% 3% 10% Taiwan, 4% Indonesia, 22% Spain, 5% Hong Kong, 8% Malaysia, 12% South Korea, 9% Power China, 12% Others 90% Japan, 10% India, 12% * Others include cem
Slide 23: 1H18 performance of Adaro Mining
1H18 performance of Adaro Mining Units 1H18 1H17 1H18 vs. 1H17 Coal Production Mt 24.06 25.13 -4% Sales Volume Mt 23.80 25.27 -6% Overburden Removal Mbcm 123.01 111.78 10% Strip Ratio x 5.11 4.45 15% • As weather condition improved in the second quarter, our coal mining subsidiaries were able to del
Slide 24: 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 $120 million for 75% of the properties. Adaro now owns 100% of the asset. • First coal production has started at the Haj
Slide 25: Snapshot of Kestrel Coal Mine
Snapshot of Kestrel Coal Mine • EMR Capital and Adaro Energy completed the acquisition of Rio Tinto’s 80% interest in the Kestrel Coal Mine (Kestrel) on August 1st, 2018. • Adaro Energy’s first coal mining operations overseas. • Kestrel is located 40 km north of Emerald in the Bowen Basin coal field
Slide 26: Adaro Services and Adaro Logistics
Adaro Services and Adaro Logistics 26
Slide 27: Ensuring operational excellence
Ensuring operational excellence Strengthens Adaro’s Earnings Profile as Contribution to Parent Co Increases • Key part of our vertical integration. • Ensures operational excellence, productivity improvement and timely reliable delivery to customers. • Non coal mining business accounted for 20% of Ad
Slide 28: Adaro Power
Adaro Power 28
Slide 29: Building the foundation of Adaro’s future
Building the foundation of Adaro’s future Bhimasena Power Indonesia Tanjung Power Indonesia Capacity 2x1000 MW 2x100 MW Stake 34% 65% Acquired Partner(s) J-Power (34%), Itochu (32%) Korea EWP (35%) Location Central Java South Kalimantan • Signed 25 years PPA with PLN • Signed PPA with PLN • Total Ca
Slide 30: Adaro Energy 2018 guidance
Adaro Energy 2018 guidance Coal production (Mt) Consolidated planned strip ratio (bcm/t) 56.2 5.6 5.7 54 - 56 5.2 4.9 4.6 4.5 52.3 52.5 51.5 51.8 2013A 2014A 2015A 2016A 2017A 2018F 2013A 2014A 2015A 2016A 2017A 2018F Operational EBITDA (US$ billions) Capital expenditure (US$ million) 1.3 750 – 900
Slide 31: Conclusions and takeaways
Conclusions and takeaways • Coal market is relatively balanced. − Supply discipline continues while demand in most markets are unexpectedly high • Long term fundamental for coal remains promising. - Indonesia, Southeast Asia and India will be the main drivers. • Adaro offers a complete portfolio of
Slide 32: www.adaro.com
Visit our website at: www.adaro.com Our annual report is available for download here: 32
Slide 33: Thank you
Thank you 33 This presentation is also available at http://www.adaro.com/pages/read/10/45/Presentation
PT Adaro Energy — Investor Presentation (October 2018) on 6ix