Margin Squeezed, Adaro Profit Slashed 49.5% - The Indonesia Today

Energy company PT Adaro Energy (ADRO) Tbk booked net profit of Rp2.2 trillion last year, slashed 49.5% from 2009 on squeezed margin.

Adaro reported sales revenue of Rp24.69 trillion last year, down 8.3% from 2009, while its operating profit dropped 31.8% to Rp6.774 trillion. ADRO's revenue increased 4.9% in USD to US$2.72 billion as rupiah appreciated substantially last year.

Cost of revenue increased 22% due to higher planned stripping ratio, longer overburden hauling distances, and additional weather-related costs. Coupled with higher finance costs, increased amortization of goodwill, as well as extraordinary demurrage charges resulted in substantial drop of net profit last year.

Adaro produced 42.2 million tons of coal last year, increased 4% from 2009, while sales grew 6% to 43.84 million tons. The average selling price of coal, meanwhile, declined 3% to US$57.18 per ton. "Due to the rescheduling of some higher-end priced contracts and quality adjustment to 2011. The rescheduling was a result of unable to produce enough to meet the strong demand," Adaro said in a press statement Wednesday (March 30).

The stock closed at Rp2225 Wednesday (March 30). At that price, ADRO has market capitalization of Rp71.17 trillion. The stock price reflected PE multiple 32.2 on its 2010 earnings.

Adaro's ROE and ROA slashed 52.5% and 47.3% respectively to 11.9% and 5.4% last year, while net profit margin tumbled 45% to 8.9%. Adaro is now valued 3.8 x equity as at December 31, 2010 of Rp18.576 trillion.