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Why Invest in Adaro?

The Power of Positive Energy


Each time we ship Envirocoal, the cleanest thermal coal available on the export market, on schedule and as ordered to our loyal customers, we deliver positive energy.

In the passionate work of each of our employees, in the way we conduct ourselves, in the impact that we have on those around us and in the contributions we make to society, we deliver positive energy.

As we turn a non-renewable resource into a renewable one by building strong, healthy communities surrounding our operations, as we create maximum sustainable value from Indonesian coal, we deliver positive energy.

Here are seven core reasons to believe in us:

Despite renewables push, the energy sector in emerging Asian countries will still rely on coal as an affordable and reliable source of electricity. Southeast Asia and South Asia regions are the pockets of growth for thermal coal demand going forward. Indonesia as the largest exporter of thermal coal, has strong geographical advantage to cater to these Asian customers.

As a natural extension to our thermal coal operations, we have begun to produce metallurgical coal to satisfy the needs of emerging markets in Asia. In 2018, we added a significant metallurgical coal asset into our portfolio through the acquisition of Kestrel coal mine so that our products portfolio now spans from sub-bituminous thermal coal for power generation to premium hard coking coal product, an essential, non-substitutable component in steel-making. The acquisition has also grown our coal resources to 15.47 billion tonnes and coal reserves to 1.52 billion tonnes (not equity adjusted).

Our internationally trademarked Envirocoal is among the lowest-pollutant coal available in the global seaborne thermal coal market due to its ultra-low sulphur, ash and nitrogen content. Envirocoal thus provides excellent economic and technical benefits to our customers, most of which are sovereign-backed power utilities. On top of the reliable supply we provide them with, Envirocoal’s low-pollutant content allows them to meet their countries’ stringent emission standards and to lower their operating costs. Our coal’s ultra-low ash content reduces ash disposal costs, and ultralow sulphur helps reduce reliance on high-cost desulphurization equipment.

The business environment and competitive landscape is constantly evolving, and how a company deals with these changes determines its success in sustainable value creation. Therefore we have to be able to continuously challenge ourselves to constantly improve, in order to adapt to these changes.

Now we run a business model that includes eight business pillars, and we continue to seek growth opportunities in each and every one of them. We recognize that coal is cyclical and our non-coal mining pillars provide us with stable earnings base which support our profitability, hence counter balance the volatility of coal. In 2018, our non-coal mining pillars accounted for approximately 20% of our operational EBITDA.

On the back of our strong operations and efficiency measures, we have positioned ourselves as one of the most profitable coal mining companies in Indonesia. We achieved our operational EBITDA target of US$1,100 million to US$1,300 million with our US$1,408 million operational EBITDA and 39% operational EBITDA margin, among the best for Indonesian coal miners.

Our capital structure remains healthy with a net debt to EBITDA ratio of 0.29x, plus we have a US$928 million cash balance as well as US$261 million in undrawn, fully committed credit facilities, as well as US$89 million in financial assets available for sale, giving us access to liquidity of US$1,278 million.

Our strong and healthy capital structure, cash position and liquidity allow us to weather the volatility in the coal market and continue to execute on our business model.

Our resilient financial performance has enabled us to provide returns consistently to our shareholders. It is our intention to continue to pay dividends as a token of appreciation to our shareholders for their continuous support for AE. Despite not having a specific policy on dividend, we have never missed a single dividend payment since we went public in 2008. From the time of our IPO, we have paid more than US$1,100 million in total cash dividend with an average payout ratio of 39%.

In achieving our vision of becoming a leading Indonesian mining and energy group, it is vital that we balance between the “triple bottom line” of people, planet and profit. We do believe that high-quality sustainability programs support long-term value creation and that we must aim to create self-sufficient communities and conserve the environment to be sustainable even after the completion of our mining operations.

Our core strategy prioritizes community development programs, the health and safety of our workforce, and the sustainability of the environment in which we operate. We work with our stakeholders to create shared value and champion the principles of mutual respect, partnership and long-term commitment.

We continue to pioneer the environmentally conscious projects such as biodiesel plant, water treatment facilities, development of coal-fired power plants with ultra-super critical technology, and development of renewables power plants and participate in water treatment projects across Indonesia to create value for the Adaro Group, the local communities and the country.

Last modified on June 14, 2019, 9:04 am | 110597