BANPU SAYS EARNINGS IN THIRD QUARTER WAS HURT BY COAL PRICES

(Following is a press release of Banpu Pcl via an
electronic mail. The statement was confirmed by the sender.) 
Press Release 12 November 2012
Banpu Reports 3Q/2012 Performance 
Mr. Chanin Vongkusolkit, CEO of Banpu Public Company
Limited (BANPU) said that the third quarter profit this year was
lower following the weakening of global coal prices. The Company,
however, can maintain a gross profit margin (GPM) of coal
business at a sound level thanks to the cost management program
that has been implemented since the beginning of the third
quarter. 
The softening coal price derived from excess supply in the
market while coal demand was also growing at a slower rate. “The
weakening coal prices earlier stem from higher production,
causing excess volume of coal in the market. The growth in coal
demand this year, however, stays at a favorable level of about 7
percent, driven by high demand of coal from major coal users
such as China, India, and Japan, which is expected to grow
further. This would bring a positive outlook to the future coal
prices,” Mr. Chanin said. 
In response to the coal price downturn, BANPU has executed
several measures to cope with the situation, including lowering
of production cost, deferral of unnecessary investment plans,
and reduction of other expenditures. These measures have begun
to yield a result. In the third quarter, the Indonesian coal
operations managed to produce at a lower cost of production of
around USD 4 per tonne. 
“Foreseeing the impact of lower average selling prices, the
management team has responded by adjusting down mining stripping
ratios of the Indonesian mines together with improvement in mine
planning and logistics management. This brought the production
cost down by 7 percent from the second quarter while the gross
profit margin remains steady. BANPU will focus on continuing its
cost management program to minimize impact from lower average
selling prices. Our goal is to maintain strong net profit and
financial position as well as our dividend payment capacity,” Mr.
Chanin emphasized. 
In the third quarter 2012, BANPU recorded a net profit of
THB 2,262 million, a decrease of 46 percent from the same period
last year and 17 percent from the second quarter this year.
Sales revenue reported at THB 29,218 million, THB 1,467 million
or 5 percent lower than the same quarter last year due mainly to
lower coal prices. The total sales revenue comprised THB 27,755
million of coal sale (94 percent of total revenue) and THB 1,463
million of sales from power and steam (6 percent of total
revenue.) GPM of this quarter is at 38 percent. 
GPM of coal business is 39 percent while power business is
30 percent.
Coal operations in Indonesia and Australia have increased their
sales volume with lower production cost in this quarter, which
lessened the impact on the profit margin. China coal business
generated equity income of THB 22 million with a greater selling
price compared to the second quarter. Gaohe Mine also started
its commercial operation officially in late September this year
after receiving production license from the Coal Industry Bureau
of Shanxi Province. 
The power business continued to perform steadily and
contributed solid earnings. BLCP operated smoothly and delivered
equity income of THB 899 million including foreign exchange gain
of THB 129 million. China power business realized a net profit
of THB 116 million. Meanwhile, the Hongsa Power project in Laos
PDR has progressed well on its construction with around 30
percent completion, which is ahead of schedule. 
The court case is not related to the project both financial
and development. Since an issuance of the verdict, the
management team has worked with legal advisors to prepare for
the appeal, and been assured of both factual and legal grounds
of arguments which would be raised in the appeal. 
“Currently, the management has been working with the lawyers
and legal advisors for efficacy of the appeal,” Mr. Chanin
concluded.
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