Indika Energy eyes revenue increase this year on the back of higher coal prices and more cost-cutting, paving the way for the company to return to profit. (Reuters Photo/Romeo Ranoco)

Indika Bullish on Coal, Targets Revenue, Profit Increases


JANUARY 31, 2017

Jakarta. Indika Energy, an integrated energy company from Indonesia, eyes a revenue increase of 25 percent this year on the back of higher coal prices and improved efficiency across all of its business units, paving the way for the company to return to profit.

The company — which owns coal mines, power plants and engineering and maintenance services for coal, oil and gas miners — targets a revenue of $1 billion this year.

It earned an estimated $800 million in revenue last year, Azis Armand, Indika's finance director, said on Monday (30/01).

Azis expected coal prices to continue its rally since the end of last year, with prices hovering between $70 to $80 per metric ton.

Indonesia's benchmark coal price was at $86.2 a metric ton in January, 62 percent higher than $52.3 a metric ton in the same month a year ago, according to data from the Ministry of Energy and Mineral Resources.

"We are targeting production of 33 million metric tons of coal this year, roughly equal to last year's production," Azis said.

Indika expects its Kideco Jaya Agung mine to produce 32 million metric tons of coal this year. Another coal subsidiary Multi Tambangjaya Utama should produce one million metric tons, according to Azis.

Indika exports three-quarters of its coal to China, South Korea, Japan, Italy and India.

Indika President Director M. Arsjad Rasyid said the company's cost-cutting measures in the past two years following a big drop in global coal price has already shown some positive results. The company's gross profit margin rose to 11 percent last year from 8 percent a year earlier.

"We expect revenue to increase and costs to fall this year, so hopefully we'll see some profit by the end of the year," Arsjad said.

The company's net loses narrowed to $27.6 million in the first nine months last year from $34.6 million in the same period a year earlier.

Aside from coal mines, Indika also controls engineering service subsidiaries Tripatra Engineers and Constructors, Tripatra Engineering and listed company Petrosea.

Indika also owns Mitrabahtera Segara Sejati, which provides mining transportation and logistics delivery, and power plant operator Cirebon Electric Power.

The latter is building a 1,000-megawatt power plant in Cirebon, West Java, and Indika expects to close a financing deal for the project soon, Arsjad said.

This year Indika Energy will allocate $80 million for its capital expenditure, double last year's estimate of $35 million to $40 million. The company will use most of the capex to buy new equipment, he said.

Indika is controlled by Agus Lasmono — son of the late Sudwikatmono, cousin of former president Soeharto — and the Wiwoho Basuki Tjokronegoro family through holding company Indika Mitra Energi.

Agus became president commissioner at Indika last week after Wisnu Wardhana, who is also Wiwoho's son in law, resigned from the post to campaign for Jakarta governor candidate Agus Yudhoyono, son of another former president, Susilo Bambang Yudhoyono.