PT Bumi Resources Minerals Tbk (BRMS) Earnings Call Transcript & Summary

We are honored to have Pak Donny, Director and CFO of Bumi; Pak Andrew, Director and COO of Bumi; and Pak Chris, Director of Bumi Resources, today doing this call with us. As usual, Pak Andrew will do a rundown of the business update for the first half 2026. Then we will move into a question-and-answer session. Pak Andrew, please go ahead.

Well, actually, Pak Chris...

I'll kick off with production and just a comparison of the first half compared to last year. And then we'll -- after that, and then we'll pass over to operational side to Andrew, and then we'll go into financials with Pak Donny, if that's okay. So thank you, everyone. Welcome. Good evening and good morning wherever you are. Going to production, comparisons of first half of 2025 to 2026. As you can see on the chart here, overall combine increase, which we have mainly due to efficiencies on performances contractors at Arutmin, while KPC has -- is performing well and is stable as we've reported. The numbers are slightly increases -- show slight increases, which is a positive for us. FOB price, we also see some increases there. And this is reflected in prevailing coal market conditions, which is quite positive at this stage. And the forward curve, which we'll show later, we see that continuing at this stage. Production costs are as expected. And I think the market is no surprise that we've seen some higher fuel prices, which has been reflected in the numbers here. And that's been -- that's affected the globe with the war in the Middle East. If we run through [indiscernible] 2026 guidance, and the average is here in terms of sales. We can see a breakdown of KPC and Arutmin and the range for those 2 companies was 2 mines, where we have in total averages of 82 to 84 tonnes per annum combined in terms of sales. FOB, we're looking at between 60 and 62 averages between both KPC and Arutmin. While our costs actually reflected at a very consistent in terms of the KPC at 44 to 46, and Arutmin at 38 to 40, which gives us averages of 42 to 44 in terms of our costs. We run through, and you can see the next slide. Next, Norman. If I'm moving too fast, please let me know. But in terms of international coal prices, you see the graph here. We certainly know we're near the highs of 2022 to 2023. But performance-wise, we're happy with -- we're above the 2027 - 2017 to 2021 index. So -- and we see that continuing. This is also reflected in the next slide, where we see the forward estimates, and we see this continuing in a positive movement for us. [indiscernible]

Thank you, Chris. And from an operational point of view, as we said, KPC, pretty much maintained its slot previously as the same first half as last year. We've -- for the first half being around 216 million BCM, coal sales, though slightly up at 25.2 million tonnes compared to 24.6 million in the same time last year. Prices, so you can see it also jumped about -- almost $3 from last year. And our inventory is slightly low. Arutmin is where the big increase is now because although over abundance increased slightly, that -- you can see coal mine and coal sales have increased quite substantially. That's been because of the weather, less rain, and I'll show you that in next graph, but also the stage of the development of the mines has allowed us to get more into the coal and not just opening up the mines. So we're now mining at a steady state. So we're getting a much better performance from Arutmin. Ever [indiscernible] prices are also up, slightly about 3% compared to last year. Typically, Arutmin does a bit less because it has more domestic coal sales. And of course, the cap at that $70 part which always. So overall, we're pretty much in line with overburden removal. Strip ratios are slightly lower now because of Arutmin and coal sales though, up. It should be actually slightly higher than that 38 -- 35 -- 38.5 and sales of 38.8. Next slide, please. So you can see the rainfall against long-term averages and 5-year averages. The dark green is the actual. And you can see the KPC is pretty much in line, especially for the second quarter. For Arutmin, you can see that the benefit we've got is from the -- in that second quarter or even from March onwards, only maybe May touching anywhere near the average. The rest of the time has been pretty good. And hence, why you've seen that increase in production. And hopefully, that continues the rest of the year. Next slide, please. Overburden removal. As I said, it was pretty much in line, but really, Arutmin has been slightly up and KPC slightly down but not quite much. Coal mine has increased with KPC about the same with Arutmin increasing, as mentioned. Next slide, please. Next slide, please. Production cost wise have slightly increased because of the fuel costs -- fuel prices, which was affected by the war. We're now seeing those prices come down of the highest and the fuel prices, and we hope that will continue, especially as we [ help ] the war finish. So you should see an improvement in the prices in the costs over the fourth -- the third quarter, assuming that continues. FOB prices, as we said, have been up rising at around [ 1 29 to 1 30 dollars ] per tonne for [ Newcastle ] at the moment. Hopefully, that will continue into the rest of the year. Typically, this is the worst part of the year as the sea -- during the season. But that's being maintained because hopefully, the third and fourth quarters, you see a slight increase in prices as more demand that comes back in as the winters in both China and in Northern Hemisphere come in. Next slide, please. So Bumi [indiscernible] selling prices have been up, both for export coal and the -- excluding [indiscernible] coal from 69 to 73, and eco coal even -- with eco coal, some coal has been sub [indiscernible] to be sold abroad, and we have an increase there as well. So overall, we're at $62.90 against $61.30 last year. Next slide, please. Production costs, as I mentioned, were slightly up because of fuel prices overall at 43 data. And you can see that fuel price in the graph below, how much it's increased over from March to April, May, June. And as I said, at the moment, we see in July, prices coming down and August maintaining that as well. So we're confident that costs will be down in the third quarter, unless there's any unforeseen sudden spikes. And next slide, please. These financials are holding -- I hand it over to Pak Donny.

Thank you, [indiscernible]. So first half, we see that it's -- we got the vendor revenue by 28%. This is mainly because of the increase in coal mine and coal sales and as well as the increase in price compared to the first half 2025. The increase is also -- happened in cost of revenue and operating profit. Interest expenses, up [ quarter ] high. This is because we are starting to incur expenses in those expenses from the bonds that we are issuing since second half of last year. So other income is up by 500%. This is mainly because of vendor performances in KPC this year. So we get like 28 million higher equity pickup this year -- this first half of the year compared to last year. Income tax, of course, and profit sharing increased in line with the increase in revenue. All in all, profit for the period is up by 87%. We are now at 72.3 million as opposed to the first half last year at 38.6 million. Balance sheet-wise, total asset is up by around 300 million. This is mainly because the increase in the current asset due to the amount of bond and loan that we obtained during Jan to June this year by around 200 million. 100 is by Bumi alone, and 100 is increase [ BMS ] on the loan that they are taking up from [ Bangkok Bay ], to [indiscernible] their mines. Total liabilities, increased in the same amount, around 300 million. Equity is up because of the increase in the profit for the period. Next slide, please. So these are illustrations of what our financial statements look like if we are consolidating KPC. Ladies and gentlemen, as you are aware, we are not currently consolidating KPC in accordance with [ PSAK 111 ]. So this is to show you what our numbers look like when we are consolidating KPC. So as we can see, it's more or less similar with the previous slides. There was increase in revenue. Gross profit, interest expense also increased because of the interest expense that we incur. All in all, profit for the period is up by 115% from previously 52.1 million compared to this first half of 112 million. Balance sheet wise, we are good this year as in the previous slide, our [ cap ] ratio is now at a very excellent, above 1 ratio. Next slide, please. This is a side-by-side comparison. On the left number, you see that if we are consolidating KPC, 100%. On the right is the compression that the number that we are currently reporting in accordance with PSAK. Okay. Next slide, please. Okay. I think I have explained this in the earlier slide on the top of [indiscernible]. Next slide, please. So on the EBITDA, [indiscernible] come to EBITDA increased by 39%, driven mostly by higher sales volume and lower effective royalty rate. So in last month, the royalty rate is around -- now is around 17%. While last year is we are at 23%. So we've got a lot of -- quite a lot of setting from the effective royalty payments changed since the April 2025 last year. Equity is up by 2%. This is mainly due to the increase in net income. Next slide, please. So this is the breakdown of our consolidated adjusted EBITDA on a 100% basis. If we are consolidating KPC for the [ last sortment ] EBITDA, we are at 656.8 million, while if we are using [ price account ] based EBITDA, our LTM is 393.5 million. Next slide, please. So this is the cash balance as of 30th of June 2026. Total cash balance are at 376.9 million. At KPC, cash on hand and bank and royalty deposit at 11.40 million, while Arutmin is 51.68 million. There is a CBA of the pit fund and KPC at around 63.35 minus [indiscernible] deposit at KPC 62.4, in Arutmin, there is main portion and a deposit at 101.42. Including Bumi cash and cash equivalent at 86.9, the total cash and cash balance at 30th of June is 376.9 million. Next slide, please. Okay. I hand over to Pak Chris.

I'll take this. Thank you very much, Pak Donny. As we report on each updates and quarterly updates and half yearly updates, we talk about ESG data. Here, we have the comparisons, which are very straightforward. A lot of this is obviously related to regulatory requirements. Although we are -- in terms of the group, we excel -- we believe we excel in this area. So it's straightforward in terms of our ESG expenditure, reclamation, trees planted, safety performance, gas admissions, gas admission reductions. So we are very consistent in how we report them and how we monitor them. What we have been doing, and this has been reported in previous quarters, that we have been doing a lot of work in the last 12 months in strengthening our ESG in terms of Bumi group. And this has been predominantly related to our transition and diversification. We have begun an extensive work on IFRS S1 and S2, which will be a requirement next year in with OJK. We have elected to start this 1 year earlier, and we were reporting this in the 2026 sustainability report and its own report, the IFRS [ 1 ] reported document that will come out. This is [indiscernible] related to the company's stability and financial risks related to climate change, and it encapsulates, as I said, not just our thermal coal, but our nonthermal coal business units. And we'll be talking more about that as we move forward. Thank you.

[indiscernible]

Yes. We don't normally go through the KPC and Arutmin details, but Norman, do you mind going to the end because we have, like in the last slide. It has got moved around. Apologies for that. Just to update you guys on gold -- the gold and copper. We are producing now at Wolfram, one of the mines that we acquired late last year. We are now -- we've started in May and producing in June. And these are the numbers, the online of 27,000 tonnes. Recoveries are slightly low at the moment, and that's because we're using a stockpile as well that's going into the feed of the processing plant. We're probably only hitting about $8 million to $9 million of revenue as of June. But you'll see, does over the next month or 2 in August, September, increasing quite substantially up to above 80% as the run of mine or from the actual mine itself is -- becomes a bigger percentage of the feedstock for the [ first ] [indiscernible] plan. But we just wanted to make sure you're aware that that's all going on at the moment, and we should expect very good earnings over the second half of this year.

Yes. I think we've also to add to that. We've also previously stated that we expect at the end of this year to have, as Pak Andy said, greater detail in terms of our diversification in particularly Australia, and the upside to that, which will be -- which we expect to be extremely positive for us. I think that's -- I'll hand that back to you, Norman, and we should get to questions.

[Operator Instructions] Okay. I think audience are still warming up so I'll ask my question first. But actually, a lot of people are asking on this coal [ KB ], and I just wanted to ask, from your perspective, we are seeing a lot of coal companies, including yourself, second quarter production has been picking up. I'm just wondering what's your view on the second half production outlook and also in terms of pricing, what's your expectation with this KB coming?

I mean I see -- we see our production, as we've told you, 82 million to 84 million tonnes. We have -- we have all our KB approved and in line, and we'll do our domestic sales of 25%. And prices, we think, will stay pretty steady at the moment. I don't see anything changing, although the war may finish, which may take a bit of risk of the price, there will be increased demand, as I mentioned. So I think it's -- prices should be pretty stable, and we should see our production in line with what we've talked about.

I see. In terms of first half versus your full year production, how much was the achievement again, sorry?

So you had 38 million tonnes for the first half, and we should be...

Deciding [indiscernible].

We're at 38.9 million tonnes as of June, but we should be at 82 to 84. So we will increase over the second half of the year.

I see.

By that 42, we go to 41 million, 42 million tonnes in total on KPC and Arutmin.

Got it. Yes. [ Marissa ] has -- wanted to ask questions. Please go ahead.

Yes. Maybe some follow-up question on the MKAB. Is there any additional requirement when you want to refis up your FIP regarding the coal supply up DFO to PLN? And may I know what is the current percentage of the volume supplied to PLN?

Yes. There's no -- we don't have any increased requirements from KPC or Arutmin, and we're aiming -- we are around 25% already for the first half this year.

While waiting for the next question, allow me to chip in another one from my own. I mean could you remind us on the covenant side of things on Bumi. Since you mentioned there's rising borrowing costs, is Bumi free to do financing at this point? And what's the latest in terms of the covenant on that?

Okay. I'll answer that. So basically, Norman, our [indiscernible] loan is coming from a local one. There are no specific covenants or financial obligation that we have to fulfill to be in compliance with the board requirements. So as long as we pay the interest and principle. But when we already fully paid our first phase 1 year [indiscernible] bond in full back in early June this year. So all things are looking good for us.

I see. So there's totally no restrictions of financing. Just is back to the normal -- okay, okay. Benjamin question is in terms of Wolfram and [indiscernible] production, what is the guidance of the production profile of these 2? What can we expect?

What we said is between 10,000 to 15,000 tonnes of copper equivalent by the end of the year. The 10,000, 15,000 of tonnes of copper equivalent at the moment.

10,000, 15,000 copper. Would you -- to split into like how much will be the goal by [indiscernible]?

I wouldn't have that breakdown at the moment, and I'd have to give you the number sort of thing. [indiscernible] copper equivalent, I'm afraid.

Okay.

I mean could I add, Norman, to that question is look, this is going to be our first reporting period for Wolfram and our operations in Australia. So look, we've -- as we said, our settlement internally is positive. We -- as we've reported, Wolfram is operating, and it started with stockpile. It's now going to [indiscernible], and that will continue and grow. [ JML ] is not producing at this stage, and we've reported that in the past and that's still under construction. But it's all in terms of our projections. So we're very comfortable and confident that we're going to meet our targets and it's going to have a positive outcome to Bumi.