Portfolio News

ADARO ENERGY RECORDED 6% INCREASE IN NET REVENUE TO US$2.0 BILLION DUE TO 12% PRODUCTION GROWTH

Jakarta, October 28th, 2010 -- PT Adaro Energy Tbk (IDX: ADRO) today announces consolidated unaudited net revenue for the nine month period ended 30th September 2010 increased 6% to US$1.98 billion due to a 12% growth in production despite the 7% lower average selling price. Adaro Energy’s production and sales volumes in 9M10 both increased 12% to 31.84 million tonnes and 32.36 million tonnes respectively.

Lower than expected coal production volumes were caused by heavy rainfall during the period. Due to higher mining costs, caused by a higher strip ratio and longer overburden hauling distances, Adaro Energy’s cost of revenue increased 22% causing operating income to decline 16% to US$593 million. Net income decreased 43% to US$186 million, or a 52% decrease to Rp1,696 billion. Earnings per share decreased to Rp53.0 from Rp109.9.

Adaro Energy’s President Director, Mr. Garibaldi Thohir said: “It has been a difficult year due to unseasonal and unprecedented rainfall, but our long-term plans look better than before. We maintained a robust EBITDA of $701 million and a solid industry topping margin of 35%. Our bright assessment of the future and financial strength means we will make long term investments and create maximum shareholder value.”

With net debt to equity at 0.45x and abundant access to cash of US$1.2 billion, Adaro’s prudent financial policies have created a robust capital structure and strong access to capital markets.

Adaro Energy continued pursuing its strategy of 1) continuing its annual organic production growth, 2) improving the efficiency of its vertically-integrated coal supply chain, which might include further downstream integration into power, and 3) acquiring or investing in large quality coal deposits within Indonesia.

Financial Highlights of Adaro Energy’s 9M10 Results:

• While production in third quarter tends to be above average, due to unseasonal bad weather, production decreased in 3Q10 to 10.22 million tonnes, lower than 11.36 million tonnes in 1Q10 and 10.26 million tonnes in 2Q10. In spite of this, in 9M10 Adaro Energy recorded a 12% increase in production and sales volumes to 31.84 million tonnes,  resulting in 6% increase in net revenue to US$1.98 billion (or 10% decrease to Rp18.1 trillion).
• Adaro’s average selling price (ASP) in the third quarter of 2010 increased 6% over 2Q10, to US$59.00 per tonne. Adaro’s 3Q10 ASP was also 6% higher than 3Q09. However the 9M10 ASP of US$56.54 per tonne was 7% below 9M09 due to the poor pricing conditions in the global recession of the first half of last year.
• Cash cost excluding royalties increased 9% to US$33.25 per tonne at 9M10 compared to the same period last year due to the increase in planned stripping ratio and increased hauling distances. At the same time, cash cost in 9M10 increased 2% from US$32.49 per tonne in 1H10 due to increased hauling distances.
• Due to unusual and unseasonal heavy rains which adversely affected Adaro’s production output, coupled with the normal surge of demand in the third quarter dry season, Adaro Energy incurred higher than normal demurrage charges, recorded as an extraordinary item of US$19 million net of tax.
• Effective 7th October 2010, Adaro Indonesia and Coaltrade successfully extended the US$750 million syndicated loan facility from December 2012 to December 2015.
• To finance heavy equipment purchases, SIS withdrew the remaining US$40 million of its US$300 million senior credit facility in the third quarter of 2010.

Source: Adaro Energy - Press Release

For further information please contact:
Mr. Cameron Tough
Head of Investor Relations
Tel: (6221) 521 1265
Fax: (6221) 5794 4687
Email: cameron.tough@ptadaro.com