Geo Energy Resources Q1 net profit falls 46% to US$8.7 million
Revenue for the quarter came in at US$99 million, a drop of 25% from a year ago
INDONESIAN coal producer Geo Energy Resources reported a net profit of US$8.7 million for the first quarter of its 2024 fiscal year ended March, a 46 per cent decline from US$16 million in the same period a year ago.
Lower production volume, a decrease in the Indonesian coal price index, as well as higher finance costs contributed to the weaker performance for the quarter, said the company in a bourse filing on Thursday (May 9).
Revenue for the quarter came in at US$99 million, a drop of 25 per cent from a year ago. The board has declared an interim dividend of 0.2 Singapore cent per share.
Indonesian coal index prices averaged US$57.20 per tonne of coal in the quarter, compared to US$76.60 a year ago.
Seasonality and weather conditions have also affected production volumes. The company delivered coal sales of 1.8 million tonnes in Q1, though it added that it remains on track for coal sales to hit its target of between 10 and 11 million tonnes for the full year as higher volumes are expected in the second half of the fiscal year.
Finance costs increased to US$5.1 million from US$0.01 million a year ago as the company drew down term-loan facilities of US$220 million in October last year to fund its expansion plans and the development of an integrated infrastructure that would ramp up its annual production to between 20 and 25 million tonnes.
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Nonetheless, the company noted that its resilient cost model, as well as its optimisation plan to reduce strip ratio and cash costs had helped it to maintain its profitability. Strip ratio refers to the amount of waste that must be removed to release a given ore quantity.
Chief executive officer Charles Antonny Melati said that coal remains the cheapest source of energy and with rising concerns of energy security globally, the growing demand for coal is expected to support prices in 2024 and beyond.
Economic activity has shown resilience in the quarter and industrial expansion is likely to continue to drive steady demand for coal.
With 70 gigawatts worth of new coal power plants constructed last year in China, the country is expected to be one of the largest contributors of demand, he added.
“To build and achieve long-term sustainable profitability, we have laid the foundation for transformative growth with the acquisition of Golden Eagle Energy and we are making steady progress in the development of the integrated infrastructure to support our growth plans.”
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