Geo Energy H2 profit falls almost 40% as finance costs hike by US$5.5 million 

INDONESIAN coal producer Geo Energy Resources on Tuesday (Feb 27) reported a drop in net profit of almost 40 per cent to US$34.8 million for the second half of 2023.

The group attributed this to a fall in gross profits, which was contributed in part by a US$5.5 million jump in finance costs, from a low base of US$27,617 in the year-ago period. 

The finance cost hike follows the group’s drawdown of equipment financing of US$6.8 million for its purchase of heavy equipment in May 2023, and its term loan of US$220 million in October 2023 to support working capital and investing activities, the mainboard-listed company stated.

H2 revenue, meanwhile, fell 31.7 per cent to US$249.2 million, from US$365.1 million in the year before. The group said this was due to a drop in average selling price from the lower Indonesian Coal Index price for 4,200 gross-as-received coal (ICI4) in the half year. 

Coal prices have normalised from the highs in 2021 and 2022 because of a boost in production and gradual easing in the supply chain, the company noted.

Earnings per share for the half was 2.51 US cents, dropping from 4.02 US cents.

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Nevertheless, the board has proposed a final dividend of 0.6 Singapore cent per share, which would bring the total dividend for 2023 to two Singapore cents per share. This translates to a total dividend pay-out ratio of 33.7 per cent, which is in line with the company’s dividend policy, it noted.

For the full year, the company’s revenue fell by a third to US$489 million, from US$733.5 million in the previous year, while net profit fell 61.6 per cent to US$62 million, from US$161.6 million in FY22.

The company attributed the lower revenue to a drop in sales volume, and asking and selling price.

Production volumes in the year fell as a result of the higher strip ratios based on the geology of two of its coal mines – SDJ and TBR – the company added.

Despite this, the group still “outperformed” its 2023 initial target of eight million tonnes, it said.

Charles Antonny Melati, executive chairman and chief executive officer of the group, stressed that the coal market has remained strong since 2021.

“With Indonesia ramping up its production and achieving a record coal output of 775.2 million tonnes during the period, global constraints on coal supply gradually alleviated, resulting in normalisation of coal prices with ICI4 averaging US$62.96 per tonne in 2023, versus 2022’s US$86.06 per tonne,” he said.

At the same time, there was growing demand from China, which recorded a 61.8 per cent surge in its coal imports with an all-time high of 474.4 million tonnes in 2023, he added.

He said the group intends to continue to ramp up its production and execute its growth plans. The goal is to affirm the company’s position as one of the biggest Indonesian coal companies and realise the vision of making Geo Energy a billion-dollar business, he added.

As at Tuesday, Geo Energy’s market capitalisation stands at S$575.5 million.

Shares of the company closed down 3.7 per cent at S$0.39 on Tuesday, before the results’ release.