Impact Of Normalization Of Coal Prices, RMKE Business Revenue Drops 3.4 Percent

Coal illustration (Photo: Antara)

JAKARTA - PT RMK Energy Tbk (RMKE) explained the company's performance in the third quarter of 2023. The Director of Finance of the Company, Vincent Saputra, in his presentation said that RMKE posted operating revenues of IDR 1.8 trillion, or decreased slightly by 3.4 percent yoy.

"This is due to price normalization which causes a significant decline in the coal sales segment," he said in an online press conference, Thursday, November 2.

Despite recording a decrease in operating income, operating income from the service segment managed to balance the decline caused by the normalization of the price. Operating income from the coal sales segment amounted to Rp1.2 trillion, or decreased by 19.5 percent yoy but operating income from services grew by 59.1 percent yoy to Rp620.5 billion in the third quarter.

Thus, continued Vincent, RMKE managed to increase the gross profit margin at the level of 23.6 percent, an increase of 130bps from 22.9 percent in the same period last year.

"This was achieved because the COGS burden of the coal sales segment also decreased by 12.3 percent YoY so that the coal sales segment still posted positive performance with a smaller margin compared to last year," Vincent continued.

The coal service and sales segment contributed 59.5 percent and 40.5 percent of the Company's total gross profit, respectively. Until the September 2023 period, RMKE managed to maintain a slightly decreased gross profit of 0.4 percent yoy.

RMKE also maintains a net profit margin at 15.5 percent at the end of September 2023. This net profit performance is supported by the service segment which has a larger profit margin compared to the coal sales segment.

This is what supports the Company to be able to maintain financial performance with both segments that still record positive performance in the midst of unfavorable conditions such as price normalization.

The profit margin of the services segment is getting thicker, boosting the Company's financial performance until the period September 2023. The growth of this service segment is supported by an increase in the volume of train unloading and barge cargo which grew significantly by 9.7 percent yoy and 14.5 percent yoy, respectively.

The number of train dismantling and barge cargo until September 2023 has reached 9.2 million MT and 6.2 million MT, respectively. The increase in operational performance from the coal service segment is inseparable from the on-time performance (OTP) train unloading which is much faster 41 minutes to 3.25 hours per train compared to the train unloading time in the same period last year 4.06 hours.

The use of fuel increased by 10.9 percent in line with the increase in coal transportation volume, but the ratio of fuel use per MT of coal remained more efficient from 0.91 liters per MT last year to 0.88 liters per MT this year or more efficiently by 3.2 percent compared to the previous period.

Revenue from the coal sales segment tends to be flat amid the normalization of corrected coal prices by 16.9 percent yoy until September 2023, but the performance of this segment is still supported by the growth in mining production of PT Truba Bara Banyu Enim (TBBE) which has succeeded in producing 900.8K MT coal, or an increase of 11.3 percent yoy and contributed 53.76 percent to the total volume of coal sales.

In addition to being supported by the growth of coal in-house volume, the Company is also trying to optimize operational costs with the cost of coal sales revenue, which fell 12.3 percent yoy by 9M 2023.