Hello. Good evening, ladies and gentlemen. Hope you had a good day. Thanks for joining us today on PT Bumi Resources' first quarter 2025 earnings call. We are hosting Pak Andrew Beckham, CFO, and Pak Christopher Fong, the advisor for Bumi, for this call. The format will be a brief presentation on the business by Pak Chris and Pak Andrew. Then subsequently, we will move into the Q&A session. My name is Norman from CRC. I will be your host today. Pak Chris, you want to go ahead with the presentation?
Yeah. I think Pak Andrew is going to lead it.
Oh, okay. Pak Andrew, please go ahead.
Thank you, Norman. If we move on to the first page. As usual, guys, we will go through all the sites quite quickly and then open it up to Q&A. Please go ahead, Norm. Next slide, please.
Are you referring to slide number three?
Yeah, just move on. Just push the slides down, please.
Okay. Can you? Oh, hold on. Let me share the screen again. I think you cannot see the slide moving. Sorry. Site sharing is paused. Can you see my screen now?
No. It just said it started screen sharing, but it hasn't shown up.
Okay. Sorry.
Do you want to do it from your side? If we can, Norman, I do not know. I can try to join you too, but I think they have the control.
Let me ask my colleagues. Sorry. Okay. Can you see my screen now?
Yeah.
Okay. Sorry, everyone.
Page three, right? Okay.
Yeah. Okay. Total production for Q1 2025 is 17 million tons versus 19.5 million tons in Q1 2024. This is mainly due to the rainfalls that KPC experienced. I can come onto that a bit later. Typically, first quarter is always the wet season and always down on production. Prices. Realized coal prices for 2025 Q1 fell from $64.9 a ton from $75.8 in 2024, in line with the downward trend in global coal prices and the global economies. Production costs were down from $48 to $45, and barring a settlement on a contract at Arutmin, we would have been down even further as oil prices are slightly down, as well as strip ratios. We fell from $48 to $45, and I'll come on to more detail. Next slide, please.
Our guidance remains the same: 76 million-78 million tons of sales, prices of $60-$62, and costs of $44-$46 at the moment. We don't see those changing at the moment. If anything, I think things will come back a bit in the second half of the year. Next slide, please. Prices for the last 2025 have been pretty flat and bouncing around the $100 mark. You know , though, that the GCV Newcastle has fallen in 2025, and so the HBA is following, but slowly following. It's meant to be tracking the indexes, but it seems to be a slightly more optimistic, shall we say, than the actual coal indices. Next slide, please. The forward curve is still talking about the Newcastle being at $121 in calendar 2027, sitting in contango.
What you see is the market at the moment is running and bouncing against around the $100 mark because that's pretty much what we understand the 50% of the Australian coal producers are running at. That sort of cost curve is around $100 US or equivalent in Aussie dollars, but that $100 seems to be the cost base. That's why every time you see it drop below $100, it soon recovers. We expect it to start moving up if in October, August, or September, the market starts recovering and restocking starts for the winter in the Northern Hemisphere. What's he doing in there? Next slide, please. On the Bumi operational highlights, there is our four KPC.
The strip ratio you can see is down along with coal mining, but overall, in the first quarter, our strip ratios are down from 9.1 last year to 8.4 this year overall. That's because our mine plans are now coming into the second part. We've opened up the mines over the last two years, and now we have fully developed mines. You should see these strip ratios stay below last year's levels. You can also see the overall prices have come down by about 14% overall from $75.8 to $64.9. KPC was down 17%. You'll note that Arutmin was down only 2%. That's because it's been using the lower grades, but also the domestic market size that it supplies is fixed at that $70 mark. You don't get so much of a drop at Arutmin. Next slide, please.
With the rainfall, you could see that at KPC, compared to the long-term averages, you've been quite volatile in the first quarter. You've gone for both January and March; it was way above, and February was way below. April is still above the long-term average, so we've had less sales in April because of that. May looks to be better. This is in East Kalimantan or East Borneo, you might know it as. That area has got more volatility. If you look at South Kalimantan, where Arutmin is, it's been pretty much in line with the averages for the last six, seven months. Overall, the last year and a half, you've seen pretty much in line with the forecast. We go on to the next slide, please.
As I said, overburden removed came down because strip ratios were down and less production though at KPC because of the wet weather. Coal mine was also down mainly because of KPC's rainfall effect. Next slide, please. Coal sales slightly down on last year. As you can see, at Arutmin, we used up some of the stock and maintained sales at 4.8 million tons, but KPC was slightly down. Stripping ratios, as I've talked about, also fell, and we should expect them to carry on this year at about those levels. Next slide, please. Production costs were down. KPC down in terms of per ton because of the strip ratio reduction. Arutmin slightly up, but that was one contract of reconciliation and settlement. You should see that come back to around that $40 mark going forward.
FOB prices, as we've talked about, the market has come down, but Arutmin not so bad given the product mix actually and the sales to the domestic market. Next slide, please. The average selling prices were down for Eco Coal, you can see, or the low grade; it was from $47 to $42, about 10%. But for the high-grade and mainly export coal, it's dropped from $86 to $73, or about $13, or about 10-15%. It's dropped now. Next slide, please. With the cost, as I said, Arutmin was slightly up because of a contract reconciliation with the contractor. That's now, so we should see that come back in line or a little bit lower. Similarly, KPC, though, is dropping as we get into our strip ratio; it becomes better.
Also, I should point out that oil prices are down, so that has helped a lot in terms of our costs. Oil is typically around, at this sort of levels, around 30% of our total costs. Next slide, please. When we look at the financial performance, if you note the operating income, this is mainly for Arutmin, is up on last year. However, because of the adjustments in Q1 2024, there was an adjustment to deferred tax asset, which increased the profit, but we do not have that this year. It was a one-off. So our actual owners of the parent number was $20 million this year versus $67 million for our net profit realized. Assets, we are still maintaining a good current ratio above one, and we are in a strong, stable position. Equity is at 2.9 net at the moment. Next slide, please.
The consolidated financials give you the total revenue, including consolidated KPC as well. You can see an operating income overall was slightly down on last year because of prices. That is the main reason for that. Overall, though, we would come back at the 18 against the 16. Still the same owner of the parent, but under our PSAK accounting regulations, we cannot consolidate KPC in our financial statements. Usually because of the strong shareholder agreement, which is quite good for governance but restricts us from consolidation. But we want to show you this so that you get an idea of the actual size of Bumi. Bumi's total assets are around $6 billion, with only liabilities of $2.9 billion. We have no debt. As of March, we had no debt in Bumi level and very small amounts in KPC and Arutmin. Next slide, please.
This is just the comparison, so you can compare our current reporting standards to the consolidated numbers. If you need any more breakdown and any more detail, there is in the financial statement notes, but feel free to email us and we will happily give you as much detail as we can on this information. Next slide, please. As I mentioned, equity was slightly up on a net basis. You will see that the last 12 months, EBITDA has also upped. So from the last 12 months, we are actually performing better than we were in 2024, with cost efficiencies and lower oil prices helping. Next slide, please. You can see that on 100% consolidated basis, we have 509 EBITDA proportionate for ISAK 282 at the moment for our EBITDA numbers as we drop one quarter and add one more quarter. Next slide, please.
Cash balances were healthy at the end of March at about $400 million for ourselves. We show the restrictions on the cash-related royalty, the restriction on when the revenues come in from export coal; they are kept in deposit and can only be used on certain areas. Otherwise, they have to be restricted for the next 12 months. One of the main deposits at the moment is due to the marketing agent commission, which cannot be paid out of the U.S. dollar account under the thing. It has to be either converted into rupiah and paid, or we have to wait for 12 months on the payment. Next slide, please. ESG. Christopher, do you want to talk on this?
Sure. ESG expenditure for the year to March is $68,847,000. That's a consolidated number across both Arutmin and KPC. The breakdown as follows; you can see on the chart. We have land reclamation, trees planted, safety performance, gas emissions, and gas reduction emissions. They're quite straightforward. What we have changed in this report from previous reports is we're consolidating our numbers now. You can see a full picture of the expenditure and the breakdown associated to those numbers.
Yeah.
Yeah.
Okay. If we go on to the next slide, I think that's it at the moment. We don't really want to do any more. The only other thing to mention is that we are processing through on the quasi-reorganization plan. We are answering questions from OJK. Hopefully, at the moment, there's no issues, and we expect by June 2, we will have an EGM where it will be voted on by the shareholders. I think that's the main other update I can give you at the moment. Norman, we'll open it up for Q&A.
Sure thing. Thank you, Andrew. Thank you, Chris. Ladies and gentlemen, you can use the raise your hand function if you have to ask a question, and then I will unmute your line. Let me just kick off with one or two questions on my own before the participants warm up. Andrew, I'm quite curious on the financials of the first quarter, in a sense that we all know that the royalties for coal has been decreased, from roughly about 28% to 18%. Just wanted to get your thoughts on, in terms of per-ton basis, how much benefit will we see in the second quarter? Because I see in your presentation slide also, your cash cost is excluding royalties.
Yeah. We do that because the royalty will go up and down with coal prices, right? It's a large number, especially when it was 28%. That 28% continues up until April. From May onwards, it comes down; with the current 110, it's running at 18% or 19%. You'll see a 10% difference in our revenues, which is about what? If you look at our average realized numbers, we were talking about $65. You're talking about overall $6.5 reduction in royalty in, say, our actual costs. Of course, the tax won't be there, so you pay a tax of 22% on that. It'll probably be about a $4 effect, but it will happen from about May onwards to the EBITDA number. You'll probably see the benefit mostly in the EBITDA number.
I see. Thank you. You do have to. Because of the extra profit, you have to pay the corporate tax. Okay.
When we used to do it, we'd have the cost. Then you'd get your tax on the profit. Because you're going to save yourself, let's say $650 on the prices, you're going to get extra profit, and therefore you get taxed on that. A good rule of thumb, 22% is going to be about what? $12 off it, right? It'll be about $4 or $5 a saving.
Got it. Second question actually comes from a client who left down the question before the call. The question is, with coal price drop close to 20% year to date, are you doing negotiation with your contractor for both of your mines?
Not at the moment in terms of like, "Oh, we've got to renegotiate all contracts." We're in a serious position. I don't think anyone's doing that at the moment. Bar the royalty, the prices are still very good, so we still expect to be earning reasonable numbers. What we're hoping for at the moment is an extension on the licenses. Currently, our licenses go to 2030 and 2031. Once we can get those extensions, it allows us to negotiate with all the contractors on longer-term contracts. That would put us in a very good position from a cost point of view. For the contractors as well. The extension is dependent on the downstream, which we're working on at the moment. The coal to gasification or to methanol, and that work is going on. As soon as we've got some announcement, we'll give that.
Okay, got it. We don't have any raised hands so far. Andrew, actually, I also saw that the DHE deposits has kind of increased quite significantly in the first quarter. That is also another new regulation by the government, right? You need to put in the money, your export proceed, you need to put in the banks. Can you run us through what are the implications of that? Are you paying? How much interest rate are you receiving from that? Does it affect your cash flow?
Yeah. Look, it's a bit different. Before, it was three months, and you had to lock. It was locked up for three months, whatever. Nothing could be taken out. Therefore, you had to borrow from the bank against that money. So you paid half a percent of fees to the bank just to use your own money, really. Now, although it's 12 months that has to be kept. There's a number of items that you can use the money for in USD. You could take 100% and convert it all into rupiah, and that's allowed. If you don't convert it into rupiah, you can use it for certain things, like dividends, like USD costs for your operations. But certain things you can't use it for, and that's why you get this restriction, plus the timing.
We don't want to convert everything to rupiah because we are 90% either USD or USD-linked in our costs. There's a lot of USD payments that we want to use. Often the money is kept in the account there until it's ready for use. But the structure now is better in terms of you have flexibility in what you can use it for other than loaning money offshore or paying money offshore is more the restriction.
I see. I remember the headline for that was quite significant. It was saying that you need to place one year revenue in the bank, but the fact is that there were some items that you can deduct, right? The net impact is not one year revenue, is it?
No. You can convert it to rupiah and use the rupiah. The idea of it for the government was to get increased demand for rupiah.
I see.
They hoped that all the export revenue would be converted into rupiah; therefore, you increase the demand and keep the rupiah strong.
Okay. Got it. Participants, you can use the raise your hand function if you have questions to ask.
That's. Normally, if there's no further questions, we'll happily leave it at that. If there's any questions coming up, they can email us. Feel free to do that.
Sorry, I think I missed out the question in the Q&A box. Actually, there are two questions there.
Sorry.
The first is, it was said that costs typically account for 30% of your production costs. Has there been impact from B40 implementation this year?
The fuel costs, yes. Fuel costs are high, but they're about $0.05-$0.10 per liter higher because of this B40 requirement. As I might have mentioned before, nowhere in the world, I believe, do B40. I think the next highest is Brazil with B15. So it's really hitting us. And the cost is up, and what happens is that the wear and tear on the engines is worse, so your actual maintenance costs over four or five years will go up as well. So it's not been great for us, not from an operational or cost point of view. But it's about $0.05-$0.10 per liter increase.
Okay. Second question is from Benjamin. He is asking if the quasi-reorganization being approved by OJK already?
We do not get an approval. It is whether they allow us to have the EGM on the second. We will not know that until really the end of this week, that OJK are fine with all items and all things. But we are not aware of any issues at the moment.
Follow-up by Benjamin. He is asking progress on M&A plan, but I am not sure which one is he referring to.
Look, we have talked about transitioning. We are looking at targets; we are developing anything that comes up. Once we sign something binding, we will announce it. At present, I cannot say more than that.
Okay. In terms of the reorganization, I just have a question on that, just thought of it. Would it be possible for Bumi to distribute dividend after the reorganizations?
The quasi reorg will allow us to pay a dividend, yes. It takes the retained earnings back to zero from the beginning of this year. So your first quarter numbers would be $17.9 million in the retained earnings. That would allow us to look at dividends for 2025. Whether we would do that depends on performance and how we're doing, and on the board, plus the shareholders' approval, of course.
Okay. Sure. I think that's the questions from the Q&A box, and we don't have any more raise hand, Andrew and Chris. Would you want to close the session here or do you have anything to add?
No, I think we're good. Thank you.
No, thank you, everyone, and we will keep you updated on progress.
Thank you, everyone. Have a nice day ahead. Thank you.
Thank you.