PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (August 2020)
38 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, August 2020
Slide 1: PT Adaro Energy Tbk
PT Adaro Energy Tbk August 2020
Slide 2: Disclaimer
Disclaimer These materials have been prepared by PT Adaro Energy Tbk (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 conta
Slide 3: Key Questions
Key Questions • What are the recent trends in coal market and coal price? • Any impact from Covid-19 to Adaro? • 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? 3
Slide 4: Price of various thermal coal types
Price of various thermal coal types 140 800 120 700 600 100 500 80 RMB USD 400 60 300 40 200 20 100 0 0 Mar-20 May-20 Mar-17 May-17 Mar-18 May-18 Mar-19 May-19 Nov-19 Jul-20 Jul-18 Nov-18 Jul-19 Mar-14 May-14 Mar-15 May-15 Mar-16 May-16 Nov-16 Jul-17 Nov-17 Sep-18 Jan-19 Sep-19 Jan-20 Jul-14 Nov-14
Slide 5: Challenges Remain in the Short Term
Challenges Remain in the Short Term • Lockdown in many countries to curb the spread of COVID-19 has affected industrial activities and power demand. The global economy has been halted in an unprecedented way and both the World Bank and IMF forecast global GDP to contract in 2020. • Although many cou
Slide 6: Latest Update
Latest Update CHINA • Domestic production and policy on coal imports will have significant impact on seaborne INDIA market. • Slower import demand due to slow economic recovery and high coal stockpile. INDONESIA • Planned production cut of approximately 15%-20% to rebalance the market. • New Mining
Slide 7: Positive Outlook in the Long-Term
Positive Outlook in the Long-Term Seaborne thermal coal demand by region (Mt) • Electrification in the developing world continues to drive thermal coal demand with Southeast Asia and South Asia becoming more dominant in the seaborne market. • Indonesian coal has the advantage of proximity with the g
Slide 8: Metallurgical Coal: Resilient Outlook
Metallurgical Coal: Resilient Outlook Demand: Global metallurgical coal imports (Mt) • Covid-19 has posed challenges for met coal market in 2020 as a result of declining global steel production. • However, long term outlook remains resilient in line with the expected growth in steel production and c
Slide 9: Performance of Adaro Energy
adaro®) Performance of Adaro Energy
Slide 10: Solid operational and financial results
Solid operational and financial results OPERATIONAL 1H20 1H19 % Change Production (Mt) 27.29 28.47 -4% Sales (Mt) 27.13 28.77 -6% OB removal (Mbcm) 103.01 127.49 -19% FINANCIAL (US$ millions, unless indicated) 1H20 1H19 % Change Net Revenue 1,363 1,775 -23% Core Earnings 227 371 -39% Operational EBI
Slide 11: 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 1000 1.6 1800 1600 800 1.2 1400 1200 600 0.8 1000 400 800 0.4 600 200 400 0 200 0 2015 2016 2017 2018 2019 1H20 0 2015 2016 2017 2018 2019 1H20 -200 -0.4 Net
Slide 12: Cost control – key for strong performance
Cost control – key for strong performance Adaro’s estimated coal cash cost breakdown (1H20) Fixed Mining, 35% - overhead, 5% 40% Coal processing, 10% Freight & handling, 20% Fuel, 25% - 30% 12
Slide 13: Delivering return to shareholder
Delivering return to shareholder • We are committed to deliver return to our 300 70% shareholders through consistent dividend 60% payment. 250 • Dividend payout ratio since IPO in 2008 50% 200 averages ~40% and in total we have paid 40% more than US$1.6 billion in dividend. 150 • We paid a total of
Slide 14: Snapshot of Adaro Energy
adaro®) Snapshot of Adaro Energy
Slide 15: 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 16: 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 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. • Adaro Energy has subsi
Slide 18: Adaro Mining
Adaro Mining
Slide 19: Performance in 1H20
Performance in 1H20 2Q20 2Q20 1H20 Units 2Q20 1Q20 vs. 2Q19 vs. 1H20 1H19 vs. 1Q20 2Q19 1H19 Coal Production Mt 12.88 14.41 -11% 14.73 -13% 27.29 28.47 -4% Sales Volume Mt 12.74 14.39 -11% 15.42 -17% 27.13 28.77 -6% Overburden Removal Mbcm 53.25 49.76 7% 65.99 -19% 103.01 127.49 -19% Strip Ratio x 4
Slide 20: Large Coal Reserves and Diverse Portfolio
Large Coal Reserves and Diverse Portfolio 1 Adaro Indonesia: Balangan Coal 2 Adaro MetCoal 3 4 BEE: 61.04% stake 5 MIP: 75% stake 88.5% Companies: Companies S Sumatra S Sumatra Existing, S Kalimantan Central and East sub-bituminous sub-bituminous S Kalimantan sub-bituminous Kalimantan Resources 308
Slide 21: 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 22: Over two decades of solid performance
Over two decades of solid performance 2020 2019 2018 Units Guidance Actual Actual Production Mt 52 - 54 58.03 54.04 volume Strip ratio bcm/tonne 4.30 4.69 5.06 • Produce low to medium heat value thermal coal with low pollutant content, ideal for power generation. • Control over supply chain ensures
Slide 23: Strong Customer Base with Focus on Emerging Asia
Strong Customer Base with Focus on Emerging Asia Customer type by volume (1H20) Geographical breakdown of customers (1H20) China; Others**; 10% 10% 1% India; 19% Southeast Asia; 47% Power Others 90% East Asia*; 22% * Others include cement, pulp & paper, and industrial * Excluding China ** Others: Ne
Slide 24: 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 25: Adaro MetCoal Companies (AMC)
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. • AMC’s mining activities have progressed to Lampu
Slide 26: Kestrel Coal Mine
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. • Since the acquisition, Kestrel has embarked on efficiency improvement programs throughout the business. • Kestrel saleable production in 1H
Slide 27: Adaro Services and Adaro Logistics
Adaro Services and Adaro Logistics
Slide 28: Ensuring operational excellence
Ensuring operational excellence Strengthens Adaro Group’s Earnings Profile as Contribution Increases • Key part of our vertical integration. • Ensures operational excellence, productivity improvement and timely reliable delivery to customers. • Stable earnings profile buffers against the volatility
Slide 29: Adaro Power
adaro®) Adaro Power
Slide 30: 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 Developmen
Slide 31: Our Green Initiatives
adaro®& Our Green | Initiatives
Slide 32: Balance of People, Planet and Profit
Balance of People, Planet and 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 enhance
Slide 33: 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 34: 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 35: Adaro Energy 2020 guidance
Adaro Energy 2020 guidance Coal production (Mt) Consolidated planned strip ratio (bcm/t) 58,03 5.2 5.06 4.6 4.69 4.5 4.3 52.5 54.04 52 - 54 51.5 51.8 2015A 2016A 2017A 2018A 2019A 2020F 2015A 2016A 2017A 2018A 2019A 2020F Operational EBITDA (US$ billions) Capital expenditure (US$ million) 1.4 1.3 49
Slide 36: 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 37: 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. 37
Slide 38: Thank you
adaro& Thank you ~~ Gu
PT Adaro Energy — Investor Presentation (August 2020) on 6ix