Bumi 9-Month Net Income Declines 37% on Finance Costs

PT Bumi Resources, Indonesia’s biggest coal producer, posted a 37 percent decline in nine-month profit from a year earlier as finance costs surged.

Net income fell to $195.6 million, or 1 cent a share, from $310.6 million, or 1.6 cents a share, the same period a year earlier, the company said in a statement posted on the Indonesia Stock Exchange website today. Interest expenses and finance charges increased to $449 million from $80.3 million.

“Full year 2009 net income was $190 million,” Bumi Corporate Secretary Dileep Srivastava said in an e-mail today. “Year to date September 2010 net income at $195 million is already higher than full-year 2009. This is in spite of higher interest charges.”

Bumi, based in Jakarta, expects revenue to rise 14 percent to 15 percent this year due to an increase in the average selling price to $70 a ton, Srivastava said Nov. 11. Bumi posted $3.2 billion in revenue, with a selling price of $63.1 a ton last year, according to data compiled by Bloomberg.

Sales volume through September 30 this year was 44.9 million tons, compared with 41.2 million tons the same period a year earlier, Srivastava said. The average selling price for coal was $74.30 a ton compared with $57.90 a ton for the same period a year ago, resulting in stronger revenue, he said.

Revenue through Sept. 30 rose to $3.17 billion from $2.65 billion a year earlier, Bumi said in the statement filed today.

Debt Reduction

“Bumi is on track to cut debt by $600 million in 2010 and by another $1 billion in 2011,’ Srivastava said. “That is expected to reduce the interest burden significantly, leading to an increasingly robust bottom line going forward.”

Bumi’s 2010 net income is forecast at $336.6 million, according to a mean estimate of 18 analysts surveyed by Bloomberg News.

The unit of PT Bakrie & Brothers, an investment holding company controlled by the family of billionaire and politician Aburizal Bakrie, may produce and sell 60 million tons of coal this year, missing an initial target of 64 million tons due to prolonged heavy rain, Srivastava said Nov. 11. It produced 60 million tons and sold 58 million tons last year.

A La Nina weather event has brought heavier-than-usual rainfall to parts of Australia and Asia this year, including Indonesia, Southeast Asia’s largest economy. The rains have hurt tin and coal production, and also been blamed by industry groups in the country for lower output for palm oil and cocoa.

Bumi fell 11 percent to 2,650 rupiah a share yesterday. The stock has fallen 9.3 percent this year, compared with the 39.3 percent gain in the benchmark Jakarta Composite Index.

Vallar Deal

Nathaniel Rothschild’s Vallar Plc agreed earlier this month to invest $3 billion in two Indonesian coal companies, including Bumi Resources. After the deal, Vallar will be renamed Bumi Plc and Bakrie Group will be the largest shareholder. Bakrie is the first major Indonesian business to tap the U.K. equity market, home to mining stocks with a total market value of more than $250 billion.

The deal would enable the Indonesian miner the financing it needs to almost double output by 2013 and make it the world’s biggest exporter of power station coal, Indra Bakrie, who will become chairman of Bumi Plc, said Nov. 18.

Being in London will allow the company to refinance its $4.2 billion in debt at lower interest rates, freeing up cash flow to invest in expansion, Bakrie said.Source: Bloomberg