ANALYST BRIEFING 4Q18 & FY18 PERFORMANCE RESULTS Jakarta, 28 February 2019
Agenda 1 INTRODUCTION 2 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 3 2 4 FINANCIAL REVIEW 4 2 4 5 5 QUESTION & ANSWERS 2
Highlights of 4Q18 and FY18 results Coal sales Coal sales 7.4 Mt 23.5 Mt Up 0.4 Mt Up 1.0 Mt +2% Y-Y +15% Q-Q Unit: US$ million FY17 FY18 4Q18 Q-Q y-y 3Q18 1,690 592 -2% 2,008 +19% Total Revenue 606 26% -7% 30% 29% -1% 33% Gross Profit Margin 111 -28% 388 432 154 +11% EBIT 448 497 132 -22% +11% EBITDA 170 253 259 62 -35% +2% Net Income 95 $72.7 $81.0 $75.1 -15% +11% ASP (USD/ton) $88.6 3
2018 highlights 2018 Highlights A premium coal producer with +122 Mt $81/t $497 M growing business segments along Coal reserves ASP recorded in Solid EBITDA acquisition and the coal value chain FY18 growth additional drilling to +11% y-y +11% y-y 354 Mt +122 Mt 2 Mt 221 ML Organic and Additional coal Coal trading volume, Fuel distribution volume, inorganic reserves coming from more than doubled with 50:50 ratio between growth NPR acquisition and ITM and 3 rd parties compared to last year additional drilling 354 Mt 22.1 Mt $81/t Operational Coal production volume Coal reserves, 74% of ASP strongly increased performance which are premium coal maintained, despite 11% YoY supported by with CV >5,500 kcal/kg rainfall and mine closure strong coal price recovery $2 Bn $497 M $259 M Financial performance Consolidation revenue EBITDA Net income +19% y-y +11% y-y +2% y-y 4 4
Additional coal reserves Unit: Mt Coal reserves increased by 122 Mt from 2017 +77 354 (22) +45 254 END 2017 END 2018 2018 Sales Exploration Acquisition Depletion and mine plan NPR mine improvement in 2Q18 2018 5 5
Optimizing coal assets value milestones 2016-2018 2016 2017 2018 Coal value chain portfolio as end of 2018 Reserves 198 254 354 Mt Mt Mt COAL MINING +77 Mt from NPR +77 Mt from organic KITADIN +45 Mt from organic -22 Mt from sales 4 Mt coal reserves -22 Mt from sales TRUBAINDO 49 Mt coal reserves Third party coal sales INDOMINCO BHARINTO 0.7 2.0 0.9 60 Mt coal reserves 152 Mt coal reserves Mt Mt Mt NPR COAL 77 Mt coal reserves TRADING OB volume capacity JORONG 12 Mt coal reserves 45 43 37 Mbcm Mbcm Mbcm MINING CONTRACTOR Sales volume 221 24 ML ML FUEL DISTRIBUTION 6 6
Awards and achievements in 2018 Platinum Awards for Best Investment Best Corporate Gold Rating for Realization Quality Control and Governance Sustainability Report According to the Productivity Practice Award Work Plan & Budget Management Indominco wins IMA ITM’s Sustainability From Quality Control From Indonesian (Indonesia Mining Report Awarded Gold Circle (QCC) and Institute for Corporate Association) award Ratings from National Productivity Directorship (IICD) 2018 Asia Sustainability Convention (TKMPN) Report Rating (ASRR) 7
Strategies: 2019 and beyond EXPAND CORE BUSINESS OPERATIONAL IMPROVEMENT Leverage ITM’s expertise and existing Expand coal stockyard capacity at Bunyut Port. infrastructure to create synergy among nearby Improve coal hauling road condition at Melak concessions. concessions. Increase target coal trading volume in 2019 as Optimize Jorong port capacity using dredging an asset-light complement to the core coal method. mining business. Optimize truck size and cycle time. Next step for Trubaindo underground after feasibility study. MARGINS ACROSS THE VALUE CHAIN BUSINESS PROCESS ENHANCEMENT Improve and increase in-house mining Initiate corporate-wide digital transformation. contractor capacity and productivity. Promote innovation and people development. Grow fuel business volume and improve logistics to maintain disciplined cost management. Explore opportunities in power generation, as well as complete the showcase projects and build in-house capability, to capture opportunity from growing domestic electricity 8 demand.
Agenda 1 INTRODUCTION 2 2 OPERATIONAL REVIEW 3 COMMERCIAL REVIEW 3 2 4 FINANCIAL REVIEW 4 2 4 5 5 QUESTION & ANSWERS 9
Operational Summary 2018-2019 2018 OUTPUT: 22.1 Mt 2019 TARGET: 23.6 Mt* OUTPUT TREND Unit: Mt East 22.1 21.8 Kalimantan Bharinto Jorong 12.61 12.5 Kitadin INDOMINCO Trubaindo 4.7 4.9 Bunyut Port 2018 2019e TRUBAINDO 2018 2019e EMBALUT 6.4 6.4 Indominco 5.0 4.1 Samarinda BHARINTO 1.1 1.4 2.6 3.1 2018 2019e Balikpapan 2018 2019e East 1Q18 3Q18 4Q18 1Q19e 2017 2018 Central 3Q18 1Q18 4Q18 1Q19e 2017 2018 Kalimantan Kalimantan Avg.S/R 12.0x 10.8x 10.5x 12.3x 11.2x 11.1x (bcm/t) Palangkaraya COMMENTS South Kalimantan 4Q18 total output was lower than target due to Banjarmasin 1.1 1.7 heavy rainfalls at Indominco and Melak area. JORONG 2018 2019e Higher output target in 2019 as compared to 2018. Jorong Port To optimize coal reserves, average strip ratio in 2019 is expected to be higher than 2018. *) Subject to further government approval 10
2018 operational review INDOMINCO • Indominco production volume 12.6 Mt in 2018. • Rationalized capex spending by 44% in 2018. • Indominco achieved 2 Gold awards for SDGs Goal ‘Quality Education’ and ‘Marine Ecosystems’ from Indonesian Sustainable Development Goals Awards (ISDA) in Sep 2018. TD. MAYANG • Indominco achieved IMA award from Indonesia Mining Association INDOMINCO for Best Investment and Realization in Dec 2018. TRUBAINDO TRUBAINDO - BHARINTO BONTANG • Trubaindo production output achieved 4.7 Mt and Bharinto EMBALUT achieved 2.6 Mt in 2018. BHARINTO • Trubaindo: rationalized capex spending by 71% in 2018. • Trubaindo achieved Bronze Level for environmental management from Ministry of Energy and Mineral Resources in May 2018. • Bharinto: capex spending increased by 20% in 2018. JORONG • Bharinto achieved 2 awards for TOP CSR category from National Committee on Governance Policy (KNKG) in Sep 2018. MINE SITE EMBALUT - JORONG COAL TERMINAL • Embalut production 1.1 Mt and Jorong 1.1 Mt in 2018. • Finalization of study to extend the potential area at Embalut mine. • Additional drilling and coal price improvement resulted in potential additional reserves – for better mine closure activities. 11
Indominco Mandiri SCHEMATIC OUTPUT TREND 2019 target: 12.5 Mt Unit: Mt Operations 13.0 12.6 Ports 1.5 1.1 W Block Hauling Stockpile West Block ROM Crusher Mine 11.5 11.4 3.9 E. Block 3.7 stockpile stockyard 2.8 0.5 0.4 2.2 East Block 0.4 0.1 3.3 3.4 2.4 2.1 Bontang City 1Q18 3Q18 4Q18 1Q19e 2017 2018 35Km Sea conveyor Avg.S/R 12.5x 11.1x 10.5x 12.5x 11.9x 11.4x (bcm/t) 2.5Km Asphalt haul - W. Block : 24.6x 24.4x 24.4x 25.0x 17.1x 15.4x road 10.2x 10.2x - E. Block : 12.2x 9.3x 9.7x 10.2x Santan River Post Panamax Port stock yard COMMENTS 95,000 Inland DWT conveyor 4km 4Q18 production was lower than target due to rainfalls affecting the mine production. Pre-stripping activities in 1Q19 will increase strip ratio during early quarter before gradually decline in the 0 2 4 6 8 10 km following quarters. Higher strip ratio in 2019 due to optimized coal reserves. 12
Melak group – Trubaindo and Bharinto SCHEMATIC OUTPUT TREND 2019 target: TCM 4.9 Mt Unit: Mt 7.3 Mahakam 6.9 BEK 3.1 Mt River Bunyut 2.6 Bharinto 2.2 Port Product coal East Kalimantan conveyor, stacking, stockpile 2.0 Trubaindo 1.9 1.6 4.7 4.7 40km 1.5 0.7 0.6 Mine to port 0.6 0.5 Operations 1.3 1.3 1.0 1.0 Barge Port Kedangpahu Hauling River 1Q18 3Q18 4Q18 1Q19e 2017 2018 S/R (bcm/t) PT. Trubaindo Stockpile - Trubaindo : 13.5x 12.7x 11.1x 13.6x 11.2x 12.2x ROM - Bharinto : 10.6x 8.3x 10.2x 11.1x 9.1x 9.7x stockpile North Block COMMENTS Bharinto 60km South Block 1 south west of (Dayak Besar) Trubaindo: Trubaindo North Block 4Q18 production achieved as according to target. PT. TIS Bunyut port expansion to accommodate the increase in South Block 2 Melak group production. (Biangan) PT TRUST mining operation will start in 2019. 0 5 10 15 20 25 Bharinto: km PT. Bharinto 4Q18 production achieved closed to target. PT TRUST hauling operation will start in 2019. 13
Kitadin Embalut and Tandung Mayang SCHEMATIC OUTPUT TREND 2019 target: EMB 1.4 Mt Unit: Mt TD. Mayang 1.1 0.9 Bontang city IMM WB IMM EB 0.3 0.3 0.3 0.2 ROM Bontang Port stockpile Embalut 1Q18 3Q18 4Q18 1Q19e 2017 2018 5km Mine to port Embalut Port S/R (bcm/t) - Embalut : 11.2x 9.8x 12.8x 12.9x 12.2x 10.7x Mahakam Samarinda River to Muara Berau COMMENTS East Kalimantan Kitadin Embalut: to Muara Jawa 4Q18 production achieved as according to target. Operations Finalization of study to extend the potential area. Balikpapan Ports Kitadin Td.Mayang: Hauling Stockpile Continue mine closure activities including mine 0 2 4 6 8 10 km rehabilitation. Crusher 14
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