PT Indo Tambangraya Megah Tbk. booked a net income of US$134 million in the first quarter of 2010, or a 16% decrease from US$159 million in the same period last year.

The decline was mainly due to a slight fall of the average selling price of coal by 9% from US$79.2 per ton in the first half of the preceding year to US$72.0 per ton in the same period of this year. The drop caused the gross profit margin to descend by 5% from 40% to 35% and the EBIT (Earning Before Interest and Tax) to go down by 7% from US$214 million to US$200 million.

However, the sales volume jumped by 34% to 11.35 million tons in the first semester of this year, making the total sales rise by 22% from US$676 million to US$822 million.

Up to the end of first semester of 2010, PT Indo Tambangraya Megah Tbk. produced 11.0 million tons of coal or 47.8% of the target of 23 million tons set for this year.

For the first semester of 2010, the Company’s cash and cash equivalent amounted to US$391 million or climbed by 47% from US$266 million in the same period last year. The Company’s debt accounted to US$95 million while the equity totaled US$766 million.

China, the Largest Market

Of coal sales target of 23 million tons for this year, 95% has been contracted with following details: 81% has been priced, 13% has been sold referring to indexes and 1% has been committed in volume, while the remaining 5% has been not been sold yet.

During the first six months of this year, PT Indo Tambangraya Megah Tbk. delivered 2.7 million tons of coal to China (24%), 2.3 million tons to Japan (21%), 1.1 million tons to Taiwan (10%), 0.9 million tons to Italy (8%), 0.8 million tons to South Korea (7%), 0.8 million tons to Philippines (7%), 0.7 million tons to Thailand (6%), 0.6 million tons to Malaysia (6%), 0.6 million tons to Hong Kong (6%), and 0.4 million tons to Indonesia (3%).

Of total target production for this year, Indominco is expected to contribute 14.2 million tons, Trubaindo 6 million tons, Jorong 1 million tons, Embalut 1.6 million tons. As for Bharinto, it is projected to yield the first output in 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 Main Capital Expenditure

For the upcoming five years, PT Indo Tambangraya Megah Tbk. has made a plan to optimize the existing assets as well as conduct acquisition to add the coal reserves.

The Company has allocated major capital expenditure worth US$101 million for the fiscal year of 2010. The budget will be used mainly for the infrastructure development in the Indominco’s East Block, the feasibility study of underground mining in Indominco and Trubaindo Mine, the adding of heavy equipment for Kitadin Tandung Mayang Mine, and the infrastructure development of Kitadin Embalut and Bharinto Mine.

Meanwhile, the Bontang Coal Terminal Expansion Project has been completed with a new ship-loading capacity of 18.5 million ton per annum, barge-loading capacity of 2 million tons per annum, and barge unloading capacity of 12 million tons per annum.

Having been expanded, the Bontang Coal Terminal is expected to reduce logistic cost and allow blending upgrades. Furthermore, it could minimize the dependency on the third parties’ ports and enable the Company to supply coal for certain domestic demand and a niche market.

As for the Bontang Power Plant, it has run since June 22 and managed to perform a 72-hour reliability test on July 8. With the total capacity of 14 Megawatt, the Bontang Coal-Fired Power Plant now generates power to Bontang Coal Terminal and Incominco Mine.

Management Strategy

Furthermore, the Company is going on with the implementation of cost effective and cost competitive strategies by reducing various cost elements of operations.

The Company is also enhancing the execution of quality, safety, and environmental management standard as well as good corporate governance and corporate social responsibility.

Up to June 20, 2010, the Company’s total coal reserves amounted to 283 million tons, while the resources 1,650 million tons.