PT Indo Tambangraya Megah Tbk. booked net income of US$67 million in the first quarter of 2010, or dropped by 34% from US$102 in the same period last year.

The main contributing factor to the decline of the income was the average selling coal price that went down significantly by 22% from US$85 per ton to US$67per ton. The decrease caused the gross profit margin fall by 8% from 41% to 33%, and the Earning Before Interest and Tax (EBIT) descend by 18% from US$114 million to US$93 million.

The sales volume climbed by 50% to 6.1 million tons in the first quarter of this year. It made total sales rise by 17% from US$347 million to US$408 million.

Up to the end of March 2010, the total production volume was amounted to 5.98 million tons, or rose by 36% from 4.39 million tons in the same period in the preceding year.

For the first quarter of this year, the Company’s cash and cash equivalent was US$453 million, or a 6% increase from US$429 million at the end of last year. The Company’s debt was US$55 million, while equity totaled US$1,230.

With the distribution of final dividend of Rp1,286 per share on May 19, 2010, the Company has paid out total dividend of Rp1,964 per share, or 70% of net income for the fiscal year of 2009.

China Surpasses Japan

Of coal sales target of 23 million tons set for this year, 72% has been contracted with following details: 72% has been priced, 20% has been sold referring to coal indexes such as Barlow Jonker and New Castle, 8% has been committed in volume, while the remaining 6% has not been sold yet.

Of 6.1 million tons of coal sold in the first quarter of 2010, in amount of 1.8 million tons (29%) was delivered to China, 1.4 million tons (24%) to Japan, 0.6 million tons (10%) to Philippines, 0.6 million tons (9%) to Italy, 0.5 million tons (0.8%) to Thailand, 0.3 million tons (6%) to Malaysia, and 0.2 million tons (4%) to Indonesia.

For the first time, China has replaced Japan position as the biggest ITM coal buyer. It is estimated that until the end of this year, the coal demand from China and South Korea would be rising as an impact of domestic economy recovery. Entering wet session, the coal demand from Indonesia is projected to increase as the domestic supply will be declining.

For this year, the Company has set production target as much as the coal sales target, that is, 23 million tons, or rose by 1.6 million tons from the target in the preceding year. Of that amount, Indominco is expected to contribute 13.2 million tons, Trubaindo 6 million tons, Jorong 2 million tons, Embalut 1.6 million tons. As for Bharinto, it is projected to start production by the end of 2010 with initial production target of 0.2 million tons.

The Company produces coal with calorific value ranging from 5,300 kcal per kg to 6,550 kcal per kg with sulfur content of 0.3% to 0.7%, ash content of 4% to 7% and moisture level of 30% to 12%.

The Projects

With the capacity totaled 14 Megawatt, the Bontang Steam Power Plant is intended to electrify Bontang Coal Terminal and Indominco Mine. Currently the chemical cleaning has been done while equipment testing is still underway.

The operation and maintenance preparation of the plant has entered final stage, including permit and license, procurement of spare parts, installation of operating system, and manpower recruitment. It is expected to start operation in the mid of 2010.

Meanwhile, the Bontang Terminal Expansion project has upgraded the capacity of coal handling from 5.6 million tons per annum in 2002 to 18.5 million tons in the end of first quarter of 2010. It is expected to rise to 20 million tons in the end of this year.

The expanded Bontang Terminal is expected to reduce logistic cost and widen the product diversification. Furthermore, it is expected to minimize dependency on the third party and enable the Company to supply domestic demand.

The Major Capital Expenditure of US$101 Million

For the fiscal year 2010, the Company has allocated major capital expenditure of US$101 million. This budget will be primarily spent on organic asset expansion. They are among others, the improvement of the loading capacity of conveyor belt at Indominco East Block, the development of underground mining at Indomnico Mine and Trubaindo Mine, the equipment supply for Kitadin Tandung Mayang Mine, the infrastructure development of Kitadin Tandung Embalut Mine and Bharinto Mine.