Geo Energy raises interim dividend to S$0.02 a share; Q1 profit jumps 42%

DESPITE a temporary coal export ban early this year, Geo Energy Resources reported a 42 per cent growth in its net profit from operations to US$40.5 million for the first quarter ended Mar 31, 2022, up from US$28.5 million in the year-ago period.

This was driven by higher operating profit and lower finance costs from its full redemption of its outstanding notes in October 2021, the mainboard-listed Indonesian coal producer said in a business update on Thursday (May 12) evening.

Revenue grew 33 per cent on the year to about US$152 million, compared with US$114.5 million previously.

The increase was due to the higher average selling price of US$62.34 per tonne in the latest quarter, up from US$38.83 per tonne in Q1 2021.

Geo Energy said it “had to adjust” its delivery plan due to the Indonesian government’s temporary coal export ban this January. The group thus delivered 2.4 million tonnes of coal for Q1 2022, which was 17 per cent less than the 2.9 million tonnes in the year-ago period. The ban was lifted in late-January.

The price cap of around US$38 per tonne for coal sold domestically also weighed on Geo Energy’s average selling price in the first quarter of this year.

“Nonetheless, by fulfilling a higher DMO (domestic market obligations) volume in January and February, the group would be able to capture the recent upsurge in export coal prices by increasing its exports in the coming months,” said Tung Kum Hon, chief executive officer.

He added that the group remained on track to achieve 5 to 6 million tonnes of coal sales for the first half of this year. Geo Energy expects a strong quarter for Q2 2022 as it ramps up production while coal prices are high.

It declared an interim dividend of S$0.02 per share for the first quarter, up from S$0.005 per share in the previous corresponding period. The payout date will be announced later.

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Tung said the company’s share price has appreciated since the start of 2021, from S$0.19 per share to S$0.495 per share as at May 10, 2022. That represents total shareholders’ return of 223 per cent, including the dividends paid and declared during this period.

Earnings per share, converted to Singapore dollar terms, stood at about 3.86 Singapore cents for the first quarter, up from 2.72 cents in the corresponding period last year, Geo Energy said.

Its executive chairman Charles Antonny Melati expects the global coal supply to slump due to the supply chain disruptions caused by the Covid-19 pandemic and rising geopolitical tensions, while coal demand is likely to continue ramping up amid the infrastructure-led economic recovery.

“Indonesia’s coal production will likely grow on improving weather from the second quarter, and this could address the current coal shortages,” he added.

Shares of Geo Energy dropped S$0.03 or 6.1 per cent to close at S$0.465 on Thursday, before the business update was released.