SINGAPORE (May 15): Golden Energy and Resources (GEAR) saw its earnings fall 73.1% to US$7.2 million ($9.9 million) for the 1Q19 ended March, from US$26.8 million a year ago.
Earnings per share (EPS) dropped to 0.31 US cents in 1Q19, from 1.14 US cents in 1Q18.
The decline comes despite a modest 1.2% increase in revenue to US$276.2 million for 1Q19, as coal production rose 52.9% to 7.1 million tonnes during the quarter but was dragged by lower average selling price.
Average selling price for the Coal Mining Division decreased by 26.8% from US$47.35 per tonne in 1Q18 to US$34.68 per tonne in 1Q19.
1Q19 gross profit fell 21.1% to US$91.5 million, from US$115.1 million a year ago, as cost of sales rose 17.6% to US$184.8 million.
The increase in cost of sales was mainly due to increase in mining services costs, royalty expenses, mining overheads, coal freight, fuel costs and as a result of coal production ramp up and sales activities from the Coal Mining division.
Selling and distribution expenses climbed 32.6% to US$45.4 million in 1Q19, from US$34.2 million a year ago.
This was mainly due to increase in freight and stockpile expenses as a result of the increase in coal sales volume from the Coal Mining division.
Finance costs jumped 41.6% to US$7.0 million, from US$5.0 million a year ago.
This was mainly due to an increase in interest expenses resulting from the issuance of the company's bond in February last year, as well as an increase in interest expenses from new loan facility for investment purposes.
Administrative expenses grew 9.6% to US$18.3 million, from US$16.7 million a year ago.
This was mainly due to increase in salaries, benefits and employee welfare expenses; taxes and stamp duty fee; corporate social responsibilities expense; and legal and professional fees relating to corporate exercises.
Other income close to doubled to US$6.2 million in 1Q19, from US$3.1 million a year ago.
This was mainly due to an increase in miscellaneous income of US$3.95 million arising from transfer of coal sales quota under Domestic Market Obligation.
As at end March, cash and cash equivalents stood at US$119.3 million.
“The coal mining industry has been faced with challenges over the past year, most notably due to the higher fuel costs and lower average selling prices. While these market forces are not within our control, GEAR consistently strives to adapt to these market conditions by managing areas that are within our control such as operating costs,” says Fuganto Widjaja, GEAR’s executive director and group CEO.
“In April 2019, GEAR launched an innovation centre in Singapore, with the aim of transforming our capital-intensive industries through the use of digital technologies. Over the longer term, we hope to apply the solutions developed by our innovation centre to our operations in order to deliver cost savings and return greater shareholder value,” he adds.
Shares in GEAR fell 2.3% to 21.5 cents on Wednesday, before the results announcement.
