ADRO 2015

Company analysis

Adaro is an integrated energy company that has integrated business in coal mining, mining services and logistics and power plant.

The company is implemented pit-to-power business model; it has subsidiaries which are located in pit-to-power value chain from mining location to its power plant location. Its subsidiaries run in related businesses such as barging, ship loading, dredging, port services and marketing.

The company branded its sub bituminous coal product with name of envirocoal, the coal which is claimed containing low sulphur, low ash and low nitrogen. So does its mining location, the company built mining which is friendly to the environment. The company implemented green energy concept in his energy business.

Based on its annual report the company focused in power plant business as the coal price at commodity market dropped due to lower demand of coal. However, based on wood Mackenzie predicted that the coal price will soar, the average global coal Newcastle price will reach at USD 53 per ton in 2016 and USD 54 per ton in 2017.

The power plant used new technology of coal power plant, it is called circulating fluidized bed. Its subsidiaries, Makmur Sejahtera Wisesa used this technology to generate 2 x 30 MW power plant.

On other hand, in 2015 the company has been developing its new power plant through its subsidiary, Bhimasena Power Indonesia. it is expected able to generate 2 x ,1000 MW. This company would use ultra supercritical boiler technology in its power plant.

May be, Adaro wants to produce more energy from coal as its main energy resources through its power plant. This is in line with government program that sets to build many power plants as energy supply is under its demand.

During period of 2011-2015, the net revenue of the company tends to decline gradually, its CAGR of net revenue in the period is -9.4 %. It is occurred due to negative trend in coal price at global commodity market at the same year. The sales volume during the same period is still slightly growing, its CAGR is at 1.1 %in during period of 2011-2015.

Sales volume in 2015 declined 6.8 % in comparison to its sales volume in 2014. Whereas, net revenue in 2015 declined 19 % compared to net revenue in 2014.