Geo Energy H2 earnings down 56% to US$56.6m on expected credit loss allowance
Uma Devi
COAL producer Geo Energy Resources posted a net profit of US$56.6 million for the second half of 2022, down 56 per cent from earnings of US$129.8 million for the same period in 2021.
The company said the weaker bottom line was due primarily to allowances of US$15.4 million made for expected credit losses relating to receivables arising from advance payments for coal purchase and refundable deposit to acquire interest in two mining concessions in 2019.
It also cited a higher effective tax rate.
Geo Energy’s board of directors has proposed a final cash dividend of S$0.04 per share, down from S$0.05 per share in 2021. The date for the dividend payout will be announced at a later time.
Revenue for H2 fell 13 per cent to US$365.1 million from US$421.6 million.
The company attributed this to the lower sales volume during the period, which was partially offset by the higher average selling price (ASP) of coal.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Geo Energy’s average production cash cost increased during the period due to the higher mining strip ratio at its PT Tanah Bumbu Resources mine, and higher fuel prices.
This was also due to the revision of the sales royalty rate for 4,200 gross as received, or GAR, coal by the Indonesian government from 3 per cent to 8 per cent when Harga Batubara Acuan reference prices are above US$90.00 per tonne, with effect from September 2022.
Earnings for the full year fell 9 per cent to US$161.6 million, from US$177.9 million.
Revenue for the year came in at a record high of US$733.5 million on the back of a higher ASP for coal. Coal prices averaged at about US$72.14 per tonne for 2022 compared to US$56.42 per tonne for 2021, Geo Energy said.
The company’s cash profit from coal mining for 2022 averaged at US$29.04 per tonne, versus US$25.05 per tonne for 2021.
Coal sales volume declined slightly to 10.2 million tonnes in 2022 from 11.4 million tonnes in 2021. This was due to an export ban in January 2022 and prolonged extreme rainfall during the year.
Geo Energy said coal continues to be the largest and cheapest energy source globally, and plays a vital role in balancing the energy supply shortage amid the ongoing Russia-Ukraine war and supply chain disruptions.
The company is expecting coal prices to hold up well in 2023.
Chief executive Charles Melati said the increase in coal supply is also restricted by lack of financing due to environmental concerns over the industry.
He said the company plans to increase production and sale of coal from its Bumi Enggang Khatulistiwa mine, and further develop its Surya Tambang Tolindo mine, including exploration drilling after it receives the necessary permits.
The company plans to commence operations before 2024 if conditions permit, he said.
With a cash balance of US$234.1 million and “minimal debt”, Geo Energy said it is in a “strong position” for acquisition opportunities. Melati added that the company is targeting “value-accretive” acquisitions.
Shares of Geo Energy fell 1.5 per cent or S$0.005 to S$0.325 on Monday (Feb 27).
Copyright SPH Media. All rights reserved.
