GEO ENERGY: US$48.5 million profit in 1H2021 on historical high coal prices

Despite a spike in COVID-19 cases in Indonesia, Singapore-listed coal miner Geo Energy Group delivered a record set of results for the first half of 2021. • Revenue achieved was US$220.3 million (+37% year-on-year). The increase was driven by the higher sales volume and higher coal prices in 1H2021. • Net profit hit US$48.5 million, a turnaround from the net loss of US$8.7 million in 1H2020 when excluding the 1H2020 gains from repurchases of Senior Notes. "Coal prices have remained high due to the strong demand from China amidst continued curbs on Australian coal coupled with the supply constraints due to COVID-19 related disruptions in other coal mines," said executive chairman Charles Melati. "Aside from China, Asia-Pacific markets have also increased coal demand to satisfy their electricity requirements. A rising demand situation along with a tight supply environment will continue to buoy prices higher in the future."

The average Indonesian Coal Index price for 4,200 GAR coal (“ICI4”) increased to US$47.78 per tonne in 1H2021, up from US$30.61 per tonne in 1H2020. The trajectory of ICI4 coal price has continued upwards, reaching US$69.53 as at 10 August 2021 or 46% up from the average ICI4 in 1H2021.

Geo Energy sold 5.4 million tonnes of coal in 1H2021, lower than the 5.0 million tonnes in 1H2020.

As part of its resilient cost model linked to coal prices, the production cash costs of US$26.05 per tonne in 1H2021 was an increase from US$23.86 per tonne in 1H2020, said Geo Energy.

The Group’s cash profit of US$14.92 per tonne in 1H2021 more than double that of US$6.30 per tonne in 1H2020.

The Group’s operating profit of US$66.0 million was an increase of 418% from US$12.7 million in 1H2020.

Cash and bank balances as at 30 June 2021 stood at US$84.0 million, or a net cash position of US$24.8 million after the outstanding Senior Notes of US$59.2 million.

The Company is declaring a second interim dividend of S$0.005 per share, equivalent to a 26% pay-out ratio on its 2Q2021 net earnings.

This is in addition to the final dividend for 2020 of S$0.008 per share paid in May 2021 and the interim dividend for 1Q2021 paid in June 2021.

• Stronger 2H2021 expected

"We have planned our mining sequence to have higher production volumes in the second half of this year, given the current prices of coal futures traded and the continuing strong demand from China upon reopening its economy. This will place us for a better result performance in 2H2021. In July 2021 alone, the Group sold 1.0 million tonnes of coal at an ASP of US$58.34 per tonne. Our cash position as at 10 August 2021 has exceeded US$110 million." -- CEO Tung Kum Hon