Delta Dunia Makmur’s capital expenditure will be bigger

PT Delta Dunia Makmur Tbk (DOID) allocates capital expenditure (capex ) below US $ 100 million in 2021. However, the capex will be higher than 2020, in line with the improving world coal prices. . Director of Delta Dunia Makmur Eddy Purwanto said that the pandemic depressed coal prices in the second quarter and third quarter of 2020. This has also made the company put a brake on spending. If the coal price is in good condition, the company’s capex could reach US $ 300 million per year.

However, during this pandemic, the company had only absorbed US $ 18 million in capex until the third quarter of 2020. “So whether the capex will increase in 2021, the answer is yes. Because when coal prices strengthen, we can add mining service contracts and we will purchase new equipment, he explained during a virtual public exposure, Friday (18/12). According to Eddy, his party has seen a price increase in the fourth quarter of 2020, but for coal production, the company has not been able to immediately recover. This is because coal supplies that were previously held back by the pandemic must be distributed first before the company can resume production. The same thing happened to customers who rented the company’s mining contractor services. Increasing production also requires careful calculation.

This factor is coupled with weather factors such as high rainfall towards the end of the year. Next year, continued Eddy, the company will still focus on maintaining healthy cash flow. Since no one has yet confirmed how long the pandemic will be completely over, cost efficiency remains a priority. “If there is excess cash , we can use it for the opportunity to reduce debt, because there is the amortization of bank loans that we have to pay. But we have no intention of buying back the global bonds that will mature in 2022, he explained. For information, Delta Dunia has US $ 350 million in senior notes with a coupon of 7.75 percent per year. The company’s adequate liquidity is reflected in the debt to EBITDA ratio of 2.4 times as of September 2020. From an operational perspective, the company, through its subsidiary PT Bukit Makmur Mandiri Utama (BUMA), is also looking for new contracts in 2021. New contracts can replace contributions from old contracts that expire in 2020.

For example, mining contracts by PT Kideco Jaya Agung which has been running since 2004 has ended. The mining contract with Kideco Jaya Agung, which is a subsidiary of PT Indika Energy Tbk (INDY), contributed 7.4% to BUMA’s volume. The customer with the largest contribution to BUMA’s total volume is Berau Coal with a contribution reaching 56.9% by the third quarter of 2020. Berau Coal’s Lati and Binungan mining areas have a contract period with BUMA until 2025. According to Eddy, the company’s coal production and the industry as a whole are likely to return to normal in 2022 or return to the same as in 2018-2019. As of the third quarter of 2020, Delta Dunia posted revenues of US $ 494.17 million or a decrease of 28.41 percent compared to the same period last year of US $ 690.33 million.

The largest revenue contribution came from PT Berau Coal amounting to US $ 237.35 million or around 48% of the total revenue, followed by revenue from PT Adaro Indonesia amounting to US $ 62.03 million or around 13%, and from PT Indonesia Pratama amounting to US $ 50.48 million or about 10% of total revenue. Meanwhile, the volume of overburden removal until the third quarter of 2020 was 229.7 million bcm, down 24% compared to the same period last year. Coal production also decreased by 11% to 33.8 million tons by the third quarter of 2020. The decreased volume and revenue caused the company to experience a loss of US $ 3.69 million until September 2020.