Indonesia’s biggest coal miner sees first profit since 2011

Bloomberg

PT Bumi Resources will post its first annual profit in five years as a rally in fuel prices help Asia’s biggest exporter of thermal coal push through a debt restructuring.
The company, controlled by the family of Indonesian politician Aburizal Bakrie, had net income of $101.6 million last year, compared with a net loss of $2 billion in 2015, according to provisional results e-mailed by Bumi on Wednesday. The company will release audited results next month. Profit “prospects are bright” for 2017 as coal sales are seen rising between 5 percent to 7 percent with prices set to climb at least 30 percent, Bumi said.
Bumi’s shares have surged 58 percent this year, extending a more than five-fold rally in 2016 as coal prices jumped. The miner secured shareholders’ approval this week for a $2 billion rights issue and $639 million of mandatory convertible bonds. The steps will allow Bumi to reduce its debt to $1.6 billion from $4.2 billion, it said in the statement.
Bumi’s bonds due October 2017 rose 2 percent to 55.99 cents on the dollar as of 12:58 p.m in Jakarta, according to prices compiled by Bloomberg. The notes have returned more than 25 percent since its debt restructuring plan was ratified at a court in Jakarta on Nov. 28.
The miner’s coal production rose 6.5 percent to 86.5 million tons last year with average price of $41.2 per ton, or 6 percent less than a year earlier, Bumi said. The debt restructuring will leave Bumi with a more sustainable capital structure, Soo Chong Lim, a credit analyst at JPMorgan Chase & Co., wrote in a Feb. 6 report.
“The recent recovery in coal prices — assuming coal price stays at $70 per ton — and meaningfully lower cash cost of production, should allow Bumi to generate annual EBITDA of around $600 million over the next few years, which well supports its current debt level and would also allow it to trim its debts,” Lim said.
Bumi, the best performer on the LQ45 Index this year, rose 1.9 percent to 438 rupiah by midday in Jakarta, while the Jakarta Composite Index traded 0.4 percent higher.