Jakarta, October 22, 2021 – PT Darma Henwa Tbk (DEWA) reported twofold increase in 1H 2021 net profit resulting from Management’s consistent implementation of three main strategies, which are, (i) Reducing operating cost through efficient maintenance program, (ii) Global sourcing practice, and (iii) Increasing DEWA’s own-fleet production capacity.
1H’21 Key Operational Highlights
- Overburden removal volume is 57.43 Mn bcm and Coal mining volume is 7.70 Mn MT.
- Material moved volume by DEWA using its own fleet increased considerably by 61.4% to 39.70 Mn bcm (vs 24.60 Mn bcm in 1H’20).
- Contrastingly the total material moved done by DEWA sub-contractor fell sharply by 46.1% to 23.66 Mn bcm (vs 43.86 Mn bcm in 1H’20).
- Total material moved volumes decreased slightly by 7.5% to 63.35 Mn bcm (vs 68.46 Mn bcm in 1H’20). Despite discontinuation of a subcontractor in mid-2020 at our Bengalon project, DEWA successfully installed a sizable capacity from new equipment as well as rebuilding older fleets therefore minimizing total material moved capacity decline. Consequently, profitability margins widen substantially despite less production volumes and revenue as reflected in 1H’21 financial performances.
Note: Total material moved = [OB volume] + [Coal volume/1.3]
DEWA Management continues these main strategies and targets higher production volume using the Company's production fleet. DEWA increased capacity through a combination of adding new fleet populations, reconditioning/rebuilding older fleets to extend service life as well as maximizing fleet’s productivity and effective working hours. The additional heavy equipment will be installed in both South Kalimantan and East Kalimantan projects therefore further expanding overall operating capacity. A number of these extra fleet is planned to arrive at designated project sites and commence operation on the fourth quarter of 2021.
1H’21 Key Financial Highlights
- Total Asset grew by 5.0% to USD 578.1 Mn (vs USD 550.6 Mn in December 31st 2020) owing to increase in fixed asset in line with addition of heavy equipment capacity to do more work in-house using own equipment.
- While Revenue decreased slightly by 9.6% to USD 152.9 Mn (vs USD 169.1 Mn in 1H’20), gross profit margins grew significantly to 10.3% (vs 0.5% in 1H’20) driven by 39.9% drop in subcontractor cost combined with 24.1% more efficient maintenance cost.
- Operating EBITDA increase by 96.3% to USD 35.9 Mn (vs USD 18.2 Mn in 1H’20).
- Operating EBITDA margins expanded to 23.5% (vs 10.8% in 1H’20).
- Gross profit shoot 16 times to USD 15.7 Mn (vs USD 0.92 Mn in 1H’20).
- Operating profit increased by 4.3% to 6.9 Mn (vs USD 6.6 Mn in 1H’20). DEWA was able to increase operating profit despite USD 1.4 Mn foreign exchange loss due to IDR appreciation (vs gain of USD 11.8 Mn in 1H’20). This is a notional non-cash loss resulting from currency translation from IDR to USD.
- Better debt management as well as consistent debt-repayments towards banks & lease financiers’ alleviate financial charges by 5.2% to USD 5.1 Mn (vs USD 5.4 Mn in 1H’20).
- Net profit increased by 106.8% to USD 1.51 Mn (vs USD 0.73 Mn in 1H’20).
The Company understood that while there were significant drop in subcontractor cost and better efficiency in repair/maintenance costs, other cost elements have not yet follow suit in 1H’21. DEWA shall explore improvement & cost-saving initiative that can streamline these cost in the foreseeable future.
Until the first semester of 2021, the Company has expanded its work in the South Kalimantan area and is consistent in increasing the operating fleet capacity at all project sites in accordance with client’s requests. DEWA aims a sizable production volume growth until the end of 2021 which is expected to support financial performance in 2021.
In addition to expanding the capacity of coal mining services, the Company is also making efforts to expand its business in the fields of mining infrastructure and engineering services. Presently, the coal hauling road infrastructure construction project is ongoing and is expected to be completed by mid-2022. DEWA also continues to develop its engineering services business by operating a reconditioning and maintenance center for heavy equipment in Balikpapan. In the near future, the workshop is expected to increase efficiency in the supply and maintenance of the Company's heavy equipment.
"These strategies that are being carried out enabled Darma Henwa delivering more added value to clients and shareholders, while at the same time encouraging Company's growth with the intention of having better competitive advantage in mining services business and gain a wider market share," said Rio Supin, President Director of PT Darma Henwa Tbk.
With improving operational performance and financial performance, DEWA Management commit to consistently improve fundamental performance and improve operational efficiency to drive the Company's profitability.