Coal Price Plunges, Adaro Energy Profit Drops 35.96% in September 2023

PT Adaro Energy Indonesia Tbk (ADRO) reported a net profit of US$1.21 billion or Rp18.81 trillion (assuming an exchange rate of Rp15,546 per US$) for the first nine months of 2023.

According to Katadata, this profit represents a 35.96% decrease year-on-year (yoy) compared to the US$1.90 billion or Rp29.53 trillion profit recorded in the same period of the previous year.

The decline in profit is in line with a drop in revenue for the company owned by Boy Garibaldi Thohir, brother of Indonesia's Minister of State-Owned Enterprises Erick Thohir. The company's financial report shows revenue of US$4.98 billion or Rp77.43 trillion, a 16% decrease from the previous period's US$5.91 billion or Rp91.92 trillion.

Boy acknowledged that the lower profit and revenue were due to the decline in coal prices and domestic economic volatility.

“Despite the price decline and inflationary pressures, our integrated business model continues to demonstrate strong performance. We are on track to achieve our FY23 (fiscal year 2023) targets thanks to solid execution across our businesses,” Boy stated in the financial report.

In addition, the cost of goods sold increased by 17% (yoy) to US$2.99 billion or Rp46.53 trillion, from US$2.54 billion or Rp39.61 trillion previously. This was due to a significant increase in royalty payments.

Royalties paid to the government amounted to US$1.17 billion or Rp18.18 trillion, a 33% increase from US$882 million or Rp13.71 trillion (yoy). However, income tax expense decreased by 71%, from US$1.16 billion or Rp18.11 trillion in September 2022 to US$332 million or Rp5.16 trillion in September 2023.

Total fuel costs increased by 18% due to a 33% increase in fuel consumption. The cash cost of coal per ton, excluding royalties, increased by 11% (yoy) in the first nine months of 2023.

On the other hand, ADRO's production volume increased by 12% to 50.73 metric tons (mt) in the first nine months of 2023. The third quarter of 2023 contributed 17.3 mt, down from 17.7 mt in the second quarter of 2023.

ADRO's assets were recorded at US$10.39 billion or Rp161.59 trillion, a slight increase of 4% (yoy) from US$10.03 billion or Rp155.96 trillion previously.