PT Indonesia Asahan Aluminium (Persero) - 1Q 2019 RESULTS · 2019-08-14 · 3 Company Overview Background Notes: (1) Inalumbought PTBA Treasury Stock on May 2019 to increase the ownership

PT Indonesia Asahan Aluminium (Persero)1Q 2019 RESULTS

Explore – Synergize - Globalize

2

Contents

Business Update

Company Overview 3

Financial Summary 6

Management Discussion

Business Segment 7

Portfolio Overview 8

2019 Guidance 14

Strategic Project Initiative 15

Appendix

Financial Tables 16

Capital Markets Review 18

3

Company Overview

Background

Notes: (1) Inalum bought PTBA Treasury Stock on May 2019 to increase the ownership to 65.93%

(2) Not consolidated. 10% is owned by Papua Government and the Mimika Regency via PT Indonesia Papua Metal dan Mineral, however voting right would be retained by INALUM up to repayment of Papua government’s borrowing from INALUM to fund its PTFI stake acquisition.

Before Restructuring in 2017

Post-Restructuring & Acquisition of PTFI

ü Established in 1976, by the GOI and Japanese JV partnersü Consolidated by GOI in 2014, and established as an SOEü SE Asia’s Aluminium producer, 240 ktpa (2018)

ü Restructured in 2017 as the national company for all mining SOEs

ü Currently owns GOI’s 65% in each of 3 listed companies –Antam (ANTM), Bukit Asam (PTBA) (1), Timah (TINS) and 51.23%(2) of PTFI

ü Now SE Asia’s leading diversified mining and metals company

The GOI has established INALUM as the National Mining Company of Indonesia,with scale and cash flows for future growth

65% 65% 65% 9.36%

65.93%(1) 65% 51.2%(2)

100%

1 DwiwarnaShare

5 DwiwarnaShares

1 DwiwarnaShare

100%

65%

4

INALUM Government Relationship

ü 100% ownership by GOI

ü Series A Dwiwarna shares in subsidiaries allow them to be recognized as SOEs

ü Ensures strategic direction aligns with the government’s objectives

ü BOD and BOC appointment by GOIAppointmentof BOD and BOC

1

The GOI has strategic control over INALUM, which operates under global market conditions

ü Change in Capital Structure to be approved by GOIü Change in Articles of Association to be approved by GOI

CapitalStructure / Article of

Associations

2

ü M&A, Separation, Dissolution, Certain Transfer of Assetsü Certain non-operational long-term investments and

financingStrategic Corporate

Approvals

3

ü GOI owns 100% of share capital issued (US$3.76bn)Capital Contributions

4

ü GOI offers INALUM and other SOEs priority in mine concession bidding (MEMR Decree 11/2018)

Preferential Licensing

5

5

1

11

12

Company at a glanceORE AND METAL PROCESSING1. Aluminium Smelter - Kuala Tanjung2. Purification of precious metals -

Pulogadung7. Chemical Grade Alumina - Tayan8. Ferronickel - Pomalaa17.Tins Smelter – Bangka Belitung

18

14 13

17

23

45

6 7

1615

8

9

10

19

MINING CONCESSION3. Gold Mine Cibaliung4. Gold Mine Pongkor5. Gold Concession Papandayan6. Bauxite Mine Tayan8. Nickel Mine Kolaka & N. Konawe9. Nickel Mine Buli10.Nickel Mine Pulau GAG11.Coal Mine Peranap12.Coal Mine Ombilin13.Coal Mine Tanjung Enim14.Coal Mine Lahat15.Coal Mine – Bantuas16.Coal Mine – Tabalong17.Tins Mine – Bangka Belitung18.Tins Mine – Kundur, Kepulauan Riau dan Riau19.Copper Mine – Mimika, Papua

Long Term Rating Baa2 (Stable) BBB- (Stable)

6

1Q 2019 Financial Summary

Revenue USD 1.2 BnTins revenue

Commodity price i.e. Coal, Aluminium, FeNi

Bauxite and Nickel Export not optimized yet

Net Income USD 63.2 MnTins revenue

Commodity price and sales volume

Interest from global bond issuance

Increasing cost of revenue, S&GA

Dividend income

EBITDA USD 239.2 MnCommodity price and sales volume

Increasing cost of revenue, S&GA

Dividend income

Financial Highlights – P&LTotal Asset USD 11.8 Bn

Additional debt in holding

Total Debt USD 5.2 Bn

Increasing long-term loan from global bond issuance

Total Equity USD 5.4 Bn

Low income

Exchange rate

Financial Highlights – Balance Sheet

Gross Profit Margin 22.5%

Net Profit Margin 5.0%

EBITDA Margin 20.0%

Financial Highlights – P&L Margins

7

Business Segments

Upstream 1Q19 1Q18 YoYD %

Coal (mn ton) 5.70 5.28 8

Nickel ore (kton) 2.23 2.01 11

Bauxite ore (kton) 274 200 37

Gold – Mining (ton) 0.35 0.20 75

Downstream 1Q19 1Q18 YoYD %

Aluminium (kton) 61.8 59.9 3

Ferronickel (kton) 6.5 6.1 7

Tin (kton) 16.3 5.4 204

Alumina Chemical (kton) 14,042

Prod

uctio

n

Upstream 1Q19 1Q18 YoYD %

Coal (mn ton) 6.65 6.30 6

Nickel ore (kton) 1,356 1,417 -4

Bauxite ore (kton) 92 61 50

Gold – Mining (ton) 0.35 0.30 17

Downstream 1Q19 1Q18 YoYD %

Aluminium (kton) 58 44 32

Ferronickel (kton) 7.1 5.4 33

Tin (kton) 12.6 5.8 116

Gold - Trading (ton) 6.17 6.65 -7

Sale

s

49

59,7 57,751,9

59,752,9

2016 2017 2018 Jan-19 Feb-19 Mar-19

Coal Price

USD/Ton

30

33 33 3332

35

2016 2017 2018 Jan-19 Feb-19 Mar-19

Nickel Price

USD/Ton

27

34 35

27

35

2016 2017 2018 Jan-19 Feb-19 Mar-19

Bauxite Price

USD/wmt

1.266

1.2931.309

1.3341.344

1.325

2016 2017 2018 Jan-19 Feb-19 Mar-19

Gold Price

USD/Ton

1.2161.378

1.613

2.274

1.948 1.963

2016 2017 2018 Jan-19 Feb-19 Mar-19

Aluminium Price

USD/Ton

4,564,91

5,7

4,935,18

5,96

2016 2017 2018 Jan-19Feb-19Mar-19

Ferronickel Price

USD/lb

18.408

20.42920.283

21.186

21.63421.671

2016 2017 2018 Jan-19 Feb-19 Mar-19

Tin Price

USD/Ton

8

Portfolio Overview - 1Q 2019

1) INALUM Operation

PT INALUM (Persero)1

USD 118.4 MillionRevenue

USD 10.8 Million Net Profit

USD 23.0 MillionEBITDA

19.4%EBITDA Margin

PT ANTAM Tbk




10.1%EBITDA Margin

PT Bukit Asam Tbk




32.3%EBITDA Margin

PT Timah Tbk




17.2%EBITDA Margin

PT Freeport Indonesia

USD 763 MillionRevenue

USD 54 Million Net Profit

USD 177 MillionEBITDA

23.2%EBITDA Margin

v EBITDA of PT ANTAM Tbk, PT Bukit Asam Tbk, and PT Timah Tbk are excluded minority interest

1.26

8

1.38

3

1.71

0

1.59

7

1.49

7

1.37

5

1.30

4

1.11

4

1.25

2

1.49

8

1.54

1

1.66

0

1.58

6

1.876

2.274 2.338

2.028 1.910

2.210

1.815 1.690

2.106 2.223

1.954 1.948 1.963

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total Cashcost Ave. Product Price

9

PT Inalum (Persero) - Operation - 1Q 2019

Historical Cash Cost vs Price for the past 10 Years Inalum Position in Global Cash Cost

Note: Cashcost is derived from HPP/production

Unit: USD/t

Margin 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jan‘19Feb’19Mar’19USD/t 609 891 628 430 413 835 511 576 855 725 413 288 377

% 32% 39% 27% 21% 22% 38% 28% 34% 41% 33% 21% 15% 19%

: 1,586 USD/t (Mar’19)

Cashcost in 2019 is predicted lower than 2018, is caused Alumina and carbon raw material prices soften from the spikes seen in H2 2018

Low margin in March 2019 (around 19% compared with typical margin), mainly due to: 1) Lower trend of Aluminium Price; 2) High raw material cost (alumina, CPC and CTP); 3) Diversification product in

development phase to ensure product quality

10

PT Antam Tbk - 1Q 2019

Historical Cash Cost vs Price for the past 10 Years24 27 29 30 28 32

21 20 18 13 9 18 12

41

56 6050

4439

30 33 33 33 32 32

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

A. Nickel Ore

Cash cost Ave. Product Price

Margin 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jan‘19Feb’19Mar’19

USD/t 16,2 29,4 31,8 19,8 16,1 6,7 -20,5 10,3 14,6 19,8 24,3 13,8 20,5

% 40% 52% 53% 40% 36% 17% 0% 34% 44% 61% 73% 43% 64%

16 18

26 26

15 19 18 16

21 24

19

28

18 20

12

3239

27 27 27

35 35

27 27

35

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

B. Bauxite Ore



USD/t 1,6 1,3 12,2 6,5 13,5 11,6 8,2 9,2 19,0 13,7 3,4 7,6 6,9

% 9% 7% 0% 20% 34% 43% 30% 34% 54% 40% 13% 28% 20%

Unit: USD/t Unit: USD/t

466

606 78

4

817

745

729

656

723

860

890

801

828

815

971

1.228

1.620 1.695 1.523

1.277 1.216 1.266 1.293 1.309 1.334 1.347 1.306

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

C. Gold Ore



USD/t 504 621 836 878 778 548 559 542 433 420 532 519 491

% 52% 51% 52% 52% 51% 43% 46% 43% 34% 32% 40% 39% 38%

Unit: USD/t

5,3

5,7 6,3 6,9

6,7

5,5

4,3

3,4

3,5

3,9

3,2 4,0

3,7

6,8

10,1 9,9

7,76,3

7,7

5,0 4,6 5,06,2

4,9 5,4 5,4

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

D. Ferronickel



USD/t 1,5 4,4 3,6 0,8 -0,3 2,3 0,7 1,2 1,5 2,3 1,7 1,5 1,7

% 22% 44% 36% 11% -5% 29% 14% 26% 29% 37% 35% 27% 31%

Unit: USD/lb

* **

11

PT Antam Tbk - 1Q 2019

Antam Gold mine cash cost in Mar’19 is US$ 703/ton in overall and lies in 3rd quartile

Antam bauxite cash cost in Mar’19 is USD 11/ton and lies in 2nd quartile among 94 peers

Antam Position in Nickel Mine Cash Cost Antam Position in Gold Mine Cash Cost

Antam Nickel cashcost is $ 3.99/lb

Antam Position in Bauxite Mine Cash Cost

12

PT Bukit Asam Tbk - 1Q 2019

PTBA’s Position in the Global Cash cost

PTBA cash cost in Mar’19 is around 41 $/ton

Margin 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jan‘19 Feb’19 Mar’19

USD/t 30.8 20.3 30.5 23.5 9.3 11.1 9.6 9.2 20.5 17.2 12.9 14.9 11.9

% 40% 30% 35% 30% 18% 19% 19% 19% 34% 30% 25% 25% 22%

Historical Cash Cost vs Price for the past 10 Years

45,3 47,5

56,0 54,6

42,447,1

41,7 39,8 39,2 40,5 39,044,8

41,0

76,1

67,8

86,5

78,1

51,758,2

51,3 49,0

59,757,7

51,9

59,7

52,9

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


PTBA’s Position in the Global Cash cost

USD/t

13

PT Timah Tbk - 1Q 2019

Historical Cash Cost vs Price for the past 10 Years TIMAH’s Position in the Global Cash cost

Margin 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Jan‘19 Feb’19 Mar’19

USD/t 2,022 4,403 6,646 1,955 3,049 963 1,683 4,467 4,910 5,890 5,129 3,631 6,244

% 15% 22% 25% 9% 13% 4% 10% 24% 24% 29% 24% 17% 29%

11,537

15,579

20,068 19,550 19,70320,723

14,503 13,94015,520

14,315

16,05618,003

15,25813,558

19,981

26,714

21,505 22,75121,686

16,186 18,408

20,429

20,205

21,18621,634

21,503

Jan Feb Mar

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


USD/Ton

USD/t

14

2019 Guidance

Upstream Production Sales

Coal (mn ton) 27.26 28.38

Nickel ore (kton) 10,506 8,000

Bauxite ore (kton) 3,175 3,226

Gold – Mining (ton) 2.04 31.31

Downstream 1Q19 1Q18

Aluminium (kton) 245.01 249.02

Ferronickel (kton) 30.28 30.28

Tin (kton) 38.01 38.01

1Q 2019 results are in line with the 2019 guidance of the Mining Industry Holding

v During 2019, PT Freeport Indonesia will not pay dividend out due to underground mine and smelter development

224,37

1826,79

INVESTMENT

Development Routine

Million USD

Bauxite Coal Nickel Gold

Aluminium Ferronickel Tin

15

Strategic Project Initiative

SGA Refinery1. Investment: USD 850 Mn2. Product : Alumina3. Capacity : 1,000 Ktpa4. COD : 20225. Location : MempawahProgress:BFS, Land Acquisition, EPC Procurement, Financing, Tax IncentivesUpgrading POT Technology

1. Investment : USD 126 Mn2. Product : Aluminium

Molten2. Capacity : 30 Ktpa3. COD : 20214. Location : Kuala TanjungProgress :EPC Procurement

Aluminium Remelt1. Investment : USD 32 Mn2. Product : Aluminium Billet3. Capacity : 50 Ktpa4. COD : 20215. Location : Kuala TanjungProgress:Pre-Engineering, Market Study, EPC

Ferronickel Plant1. Investment : IDR 4.039 Tn2. Product : Ferronickel3. Capacity : 13,500 Ton Ni4. COD : 20195. Location : Halmahera TimurProgress:Project completion on 31 July 2019

CFPP Sumsel 81. Investment : USD 1,7 Bn2. Product : Electricity3. Capacity : 2 x 620 MW4. COD : 20225. Location : Muara Enim

SumselProgress: EPC

Coal Infrastructure1.Prajin Line (10 Mtpa)• Investment : IDR 4.2 Tn• COD : 2022• Progress : Permit, Land Acq

2.Tarahan Second Line (20 Mtpa)• Investment : IDR 4,4 Tn• COD : 2023• Progress : Permit, Land Acq

3.Kertapati Line Upgrade (5 Mtpa)• Investment : IDR 255 Bn• COD : 2019• Progress : Permit

4.Tarahan Line Upgrade (25 Mtpa)• Investment : IDR 202 Bn• COD : 2019• Progress : Permit

Copper Smelter1. Investment : USD 2.8 Bn2. Product : Copper Cathode3. Capacity : 2,000 Ktpa4. COD : 20235. Location : GresikProgress:FED, Ground Improvement, Permit, Land Lease Agreement Amandment

Consolidated Financial Performance

Balance Sheet (USD Bn) FY18 FY17 YoYD %

Cash and cash equivalents 1.6 1.4 19

Investments 4.8 0.3 1,446

Fixed Assets 2.7 2.4 16

Total Assets 11.4 6.9 66

Total Liabilities 6.2 2.0 209

• Loans 0.9 0.7 35

• Bond 4.1 0.3 1,143

• Other Liabilities 1.2 1.0 16

Total Equity 5.2 4.9 8

Profit & Loss (USD Bn) FY18 FY17 YoYD %

Revenue 4.5 3.5 29

• Products 4.47 3.45 30

• Services 0.04 0.04 12

Cost of Revenue 3.4 2.5 38

Gross Profit 1.1 1.0 8

S, G&A 0.4 0.3 21

Operating Profit 0.7 0.7 1

EBITDA 1.3 1.2 8

Net Income 0.7 0.5 46

Profitability Ratio (%) FY18 FY17 YoYD %

Return on Assets 6.4 7.3 -12

Return on Equity 14.0 10.3 36

Gross Profit Margin 24.6 29.5 -17

Operating Profit Margin 15.2 19.6 -23

Net Profit Margin 16.3 14.4 13

EBITDA Margin 28.4 34 -17

Financial Ratio (x) FY18 FY17 YoYD %

Current Ratio 226.0 247.7 -9

Cash Ratio 1.17 1.21 -3

Debt to Asset 0.4 0.1 204

Debt to Equity 0.9 0.2 370

Debt to EBITDA 3.9 0.8 369

EBITDA to Interest 8.9 16.5 -46

16

Consolidated Financial Performance

Balance Sheet (USD Bn) 1Q19 FY18 YoYD %

Cash and cash equivalents 1.60 1.62 -1

Investments 4.80 4.79 0.2

Fixed Assets 2.8 2.7 3

Total Assets 11.8 11.4 3

Total Liabilities 6.5 6.2 4

• Loans 1.1 0.9 20

• Bond 4.1 4.1 0

• Other Liabilities 1.3 1.2 6

Total Equity 5.4 5.2 2

Profit & Loss (USD Bn) 1Q19 1Q18 YoYD %

Revenue 1.2 1.1 13

• Products 1.21 1.08 12

• Services 0.02 0.01 222

Cost of Revenue 1.0 0.8 22

Gross Profit 0.27 0.30 -10

S, G&A 0.12 0.09 37

Operating Profit 0.15 0.21 -30

EBITDA 0.24 0.33 -27

Net Income 0.06 0.20 -69

Profitability Ratio (%) 1Q19 1Q18 YoYD %

Return on Assets 0.5 1.7

Return on Equity 1.1 3.7

Gross Profit Margin 22.5 27.3

Operating Profit Margin 12.5 19.1

Net Profit Margin 5.0 18.2

EBITDA Margin 20.0 30.0

Financial Ratio (x) 1Q19 FY18

Current Ratio 206.7 226.0

Cash Ratio 0.9 1.2

Debt to Asset 0.4 0.4

Debt to Equity 0.9 0.9

Debt to EBITDA 16.6 15.7

EBITDA to Interest 3.3 21.2

17

18

INALUM Global Bond

Source: Bloomberg, as of 3 July 2019

3-Year; 5.23%; Yields (%) 5-Year; 5.71%; Yields (%)

INALUM (2021)

Pertamina (2021)PLN (2021)

2.76%

2.57%2.71%

INALUM (2023)

Gol (2024)Pertamina (2023)

PGN (2024)Pelindo III (2023)

Bank Mandiri (2024)

3.17%

2.91%2.93%

3.25%3.03%

3.24%

Capital Market Review – 1H2019

10-Year; 6.53%; Yields (%) 30-Year; 6.757%; Yields (%)

INALUM (2028)

Gol (2028)PLN (2029)

4.04%

3.27%3.97%

INALUM (2048)

Gol (2049)Pertamina (2048)

PLN (2049)

5.12%

4.13%4.89%

4.91%

Description

1. Valuation

Current Price (USD/Share) 0.06 0.21 0.08

Common Shares (Million) 24,030.8 11,521 7,447.8

Market Cap (USD Billion) 1.43 2.46 0.59

2. Shareholders

Ownership Type

Institutional (%) 70 73 71

Retail & Other (%) 30 27 29

Geograhic Owernership

Indonesia (%) 93 91 92

Overseas (%) 7 9 8

3. Analyst coverage

Buy (%) 93 52 100

Hold (%) 7 36

Sell (%) 12

Target price (USD/Share) 0.08 0.28 0.13

Share Information

PT ANTAM Tbk, PT Bukit Asam Tbk, PT TIMAH Tbk are listed in Indonesia Stock Exchange with ticker of ANTM, PTBA, and TINS.

Global Bond of PT Indonesia Asahan Aluminium (Persero) is listed in Singapore Exchange with ticker of IDASAL.

Company Address :Mining Industry Holding - PT Inalum (Persero) The Energy Building 16th Floor SCBD Lot 11AJl. Jend. Sudirman, Jakarta 12190 IndonesiaP. (+6221) 29738750F. (+6221) 27936331

Investor Relations:Email : [email protected] : www.inalum.id

Disclaimer:

This presentation contains forward-looking statements based on assumptions and forecasts made by PT Inalum (Persero) management. Statements that are not historical facts, includingstatements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and speak only as of the date they aremade. We undertake no obligation to update any of them in light of new information or future events.

These forward-looking statements involve inherent risks and are subject to a number of uncertainties, including trends in demand and prices for coal` generally and for our products in particular,the success of our mining activities, both alone and with our partners, the changes in coal industry regulation, the availability of funds for planned expansion efforts, as well as other factors. Wecaution you that these and a number of other known and unknown risks, uncertainties and other factors could cause actual future results or outcomes to differ materially from those expressed inany forward-looking statement.

Documents

PT Indonesia Asahan Aluminium (Persero) - 1Q 2019 RESULTS · 2019-08-14 · 3 Company Overview Background Notes: (1) Inalumbought PTBA Treasury Stock on May 2019 to increase the ownership