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Banpu

Low coal prices pull down Banpu's 2013 net profit

Weakening global coal prices effected Banpu's 2013 net profit, with the US$103-million figure (Bt3.15 billion) lower than the previous year's.

But the solid performance of the company's power business and the success of its cost-reduction programme helped cushion the impact of unfavourable coal prices, chief executive Chanin Vongkusolkit said.

He added that in 2013 the coal industry across the world was overwhelmed by excess supply, leading to a downturn in prices throughout the year.

The NEX coal index hit its lowest level of $77 per tonne in July.

The unfavourable market directly affected Banpu's revenue from its coal business, even though its coal-sales volume last year increased by 1.22 million tonnes to 42.8 million.

The average selling price (ASP) of Indonesian coal, which was most affected by this coal-price downturn, dropped 17 per cent from the price in 2012. This resulted in a decrease of Banpu's ASP to $72.41 per tonne, or 15 per cent lower than the previous year.

Banpu recorded total sales revenue of $3.35 billion last year, 11 per cent lower than 2012.

Of this, coal sales accounted for 93 per cent, or $3.12 billion, while sales of power and steam accouned for 6 per cent, or $192 million. The power business performed well, providing a significant contribution to the company's total earnings.

BLCP, in which Banpu holds a 50-per-cent stake, operated smoothly to generate an equity income of $82 million for Banpu.

The Chinese power plants recorded a firm net profit of $23.53 million as a result of higher power demand during winter and a sound operational performance.

Last year, the coal business generated a net profit of $36.99 million for Banpu, a decrease of $192.24 million, or 84 per cent, compared with 2012.

Power

The power business had a net profit of $65.67 million - an increase of $23.22 million, or 55 per cent, on the previous year.

The gain from financial derivatives last year declined by $27 million to $79 million, with $106 million recorded in 2012.

"The lower net profit was a result of the softening coal prices together with the $27 million decrease in financial derivative gain," Chanin said.

"The solid net profit from the power business, which provides a significant contribution to Banpu's earnings, helped cushion the impact from the weakening coal prices.

"This also helped keep Banpu's 2013 gross-profit margin at a satisfactory level of 32 per cent."

He said Banpu had implemented several measures to lessen the impact from unfavourable external factors.

They include boosting operational efficiency and reducing costs, adjusting its mine plan, improving coal handling and port management to minimise energy cost, streamlining coal flows from mines to ports, and better coordination of ship scheduling to reduce port demurrage.

In 2013, the company overall was able to save $56 million in selling costs, 2 per cent lower than the previous year.

"The measures implemented helped increase the Indonesian coal-sale volume by 7 per cent to 29.21 million tonnes in 2013, whereas cost of sales for our Indonesian operation reduced to $48.17 million, or 6 per cent lower than 2012," Chanin said.

"In addition, the changes in the mine plan by the lower stripping ratios significantly reduced the production cost.

"The Indonesian coal mines' average stripping ratio decreased from 12.28 in 2012 to 11.06 in 2013."

Banpu manages coal and related businesses in six countries - Thailand, Indonesia, China, Australia, Laos and Mongolia.

As of the end of 2013, Banpu's assets totalled $7.212 billion while its total liabilities were $4.620 billion.

Its net debt-to-equity ratio as of December 31 was 1.07 times, compared with 0.79 time as of December 31, 2012.

Its earnings per share for 2013 were Bt1.22, compared with Bt3.106 in 2012.


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