PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (June 2016)
32 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, June 2016
Slide 1: Delivering Positive Energy
Creating Value, Driving Growth, Building Indonesia Delivering Positive Energy June 2016
Slide 2: Disclaimer
2 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 contain
Slide 3: Adaro Energy Snapshot
Adaro Energy Snapshot adaro#
Slide 4: Adaro Energy Highlights
4 Adaro Energy Highlights • Among the largest single- 2013A: 52.3 Mt concession coal producers Production 2014A: 56.2 Mt in the southern hemisphere 2015A: 51.5 Mt Sub-bituminous, medium calorific • Top 5 thermal coal exporter globally value, ultra-low pollutants Envirocoal Trademark regist
Slide 5: Journey to building our competitive advantage
5 Journey to 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$50 million. • After the LBO
Slide 6: Our Reliable Coal Supply Chain
6 Our Reliable Coal Supply Chain Most of Adaro's coal come from the deposits in South Kalimantan mined by AI. The physical mining and transporting of coal to customers is done by contractors appointed by AI. We tightly control this coal supply chain by using a subsidiary company at each stage as one
Slide 7: Adaro's operational and financial highlights
7 Adaro’s operational and financial highlights OPERATIONAL 1Q 2016 1Q 2015 % Change Production (Mt) 12.64 13.16 -4% Sales (Mt) 13.47 13.45 0% OB removal (Mbcm) 53.58 62.10 -14% FINANCIAL (US$ millions, unless indicated) 1Q 2016 1Q 2015 % Change Net Revenue 588 711 -18% Core Earnings 81 77 5% Net Inc
Slide 8: Coal production guidance
8 Coal production guidance Production Volumes (Mt) 56.2 52.3 52 - 54 51.5 47.7 47.2 2011A 2012A 2013A 2014A 2015A 2016F • Production guidance for 2016 is 52Mt to 54Mt, a slight increase over 2015. • Due to prolonged pressure on coal prices, we lowered our production volume by 4.7Mt in 2015, down 9%
Slide 9: Diversified customer base with long term contracts
9 Diversified customer base with long term contracts 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 Thailand, Cambodia a
Slide 10: Proven track record of production growth
10 Proven track record of production growth 2016 2015 2014 Units Guidance Actual Actual 60 Production volume Mt 52 - 54 51.5 56.2 350 AI – Tutupan Mt 41.97 43.53 AI – Paringin Mt 5.41 6.08 AI – Wara Mt 2.97 5.71 300 50 Semesta Centramas Mt 1.11 0.89 Strip ratio bcm/tonne 4.71 5.19 5.68 250 Overburde
Slide 11: Cost discipline while maintaining long-term plan
11 Cost discipline while maintaining long-term plan Consolidated Planned Strip Ratio (bcm/t) • We own or control each part of our 7 vertically integrated coal supply 6.3 5.6 5.7 5.2 4.71 chain, which enables us to better control cost. • Our investment in overburden 2011A 2012A 2013A 2014A 2015A 2016
Slide 12: Cost control is key in delivering strong performance
12 Cost control is key in delivering strong performance Adaro’s Estimated Coal Cash Cost EBITDA Margin Breakdown (1Q16) Fixed overhead, 5% Mining, 34.2% Coal 35% - 40% processing, 27.2% 10% 23.2% 19.9% 16.2% Freight & 6.7% handling, 20% ITMG Adaro Banpu PTBA Harum Shenhua Source: Bloomberg, based on
Slide 13: Solid profitability despite market downturn
13 Solid profitability despite market downturn Operational EBITDA (US$ billions) 1.5 1.1 0.9 0.8 0.7 0.45-0.7 2011A 2012A 2013A 2014A 2015A 2016F • Our low-cost operations enable us to generate healthy Operational EBITDA and maintain a solid Operational EBITDA margin despite falling coal price. • We
Slide 14: Coal prices hit by China market and chronic oversupply
14 Coal prices hit by China market and chronic oversupply 100.00 700.00 90.00 600.00 80.00 70.00 500.00 60.00 50.00 400.00 40.00 30.00 300.00 Global Coal Newcastle QHD 5500 NAR • Seaborne thermal coal prices are now being driven more by Chinese domestic market price than by traditional buyers, such
Slide 15: Market Update – Prices in May 2016
15 Market Update – Prices in May 2016 Week-on- Month-to-Date Month-on- Year-to-Date Year-on- 13 May 2016 % YoY Week Average Month Average Year Bituminous (US$/Tonne) gCN 50.64 0.03 50.63 (0.01) 50.45 (13.39) -21% API2 48.22 1.52 47.46 2.60 45.78 (14.52) -24% API3 43.69 (0.13) 43.76 1.45 41.43 (11.26
Slide 16: 2015: Falling coal cash cost supports production
16 2015: Falling coal cash cost supports production Seaborne thermal coal cash cost (CV adjusted) 2015 Cost change (%) Source: Wood Mackenzie, Dataset: November 2015, “Nominal terms” Cost reductions are more apparent for countries with costs in local currencies. Thus several coal producers are still
Slide 17: Investing in the three engines of growth
17 Investing in the three engines of growth Capital Expenditure (US$ million) 625 490 185 165 98 75-100 2011A 2012A 2013A 2014A 2015A 2016F • Reduction in capex is not at the expense of our growth. • We made the investment in our mining asset, heavy equipment and infrastructure back in 2010-12. • He
Slide 18: Balangan acquisition
18 Balangan acquisition JORC Compliant Coal Resources and Reserves (Millions of ROM Tonnes) Total Ash % Total Sulfur % Calorific Value Total (Mt) Moisture % (GAR) (GAR) (kcal/kg, GAR) Resources 172.3 31.9 1.9 0.08 4,436 • Purchased 75% for US$30.4 million enterprise value in 1Q13. • Strategically lo
Slide 19: Long-term global thermal coal demand
19 Long-term global thermal coal demand • 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 stronger post-2020. • India overtook China as largest coal
Slide 20: Coal remains important in global energy mix
20 Coal remains important in global energy mix Global electricity production by fuel type China thermal coal demand India energy mix and coal import
Slide 21: Fueling Southeast Asia's coal requirements
21 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) Imports Source: WoodMackenzie
Slide 22: Creating sustainable value integrating pit-to-power
22 Three engines of growth Creating sustainable value integrating pit-to-power Adaro Energy (AE) Coal Mining Logistics and Mining Services Power Assets Adaro Indonesia (AI) 100% Maritim Barito 100% Saptaindra 100% Makmur Sejahtera 100% Coal mining, S Kalimantan Perkasa (MBP) Sejati (SIS) Wisesa (MSW
Slide 23: Adaro Energy Mining Assets
23 5 Adaro Energy Mining Assets 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 Note: Reserves and Resources numbers 2 above are before taking into account 3 4 AE’s equity ownership 1 2 3 4 5 6 Adaro Indonesia: Balangan: MIP: 7
Slide 24: Adaro Logistics and Mining Services
16 Adaro Logistics and Mining Services • 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 Ad
Slide 25: Adaro Power
25 Adaro Power MSW’s 2x30 MW mine-mouth power plant in Tanjung, South Kalimantan
Slide 26: Strategy to build our power division
26 Strategy to build our power division • Commercially and financially attractive with solid IRR and low-cost long-term project financing. • Creates a new captive market and helps meet our DMO. • Helps to lessen volatility in Adaro’s business model. • Contributes to the development of Indonesia’s en
Slide 27: Adaro Power's current projects
27 Adaro Power’s current projects Bhimasena Power Tanjung Power East Kalimantan Indonesia Indonesia 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 Overseas Location Central Java South Kalimantan East Kalima
Slide 28: Thank You
28 Delivering Positive Energy Thank You This presentation is also available at www.adaro.com/investing/investor-presentations-and-events-calendar/
Slide 29: Appendix
29 Appendix • Profile of PT Maritim Barito Perkasa • Profile of PT Sarana Daya Mandiri • Profile of PT Saptaindra Sejati
Slide 30: PT Maritim Barito Perkasa (MBP)
30 PT Maritim Barito Perkasa (MBP) • 64 sets of tugs and barges used by Adaro with average capacity of 12,431 dwt. • Offshore coal loading at Taboneo with capacity up to 165,000 tonnes per day via floating cranes (15,000-20,000tpd), FTU (60,000tpd) and self- loading geared vessels. • FY15 coal trans
Slide 31: PT Sarana Daya Mandiri (SDM)
31 PT Sarana Daya Mandiri (SDM) • SDM dredged the Barito river channel in 2008, increasing capacity to 200Mt per year. It now manages and maintains the channel. • Adaro owns 51.2% of SDM, with the local port authority and local government owning the remaining interest.
Slide 32: PT Saptaindra Sejati (SIS)
32 PT Saptaindra Sejati (SIS) • One of Indonesia’s leading mining contractors. • FY15 overburden removal volume: 150.7Mbcm. • FY15 coal production volume: 29.5Mt.