ASSESSING THE FINANCIAL PERFORMANCE OF COAL COMPANY IN INDONESIA - A CASE STUDY OF PT ADARO ENERGY TBK RELATIVE TO THE INDUSTRY

• Main Author: Putri Jawatra, Amilia
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/72291
• Institution: Institut Teknologi Bandung

Coal industry of Indonesia is one of the biggest coal exporters in the world (Indonesia Investment, 2016). Coal industry is one of the largest contributors for Indonesia‘s GDP which is 14.27 % from total of export value 2014. According to Indonesia Investment, at least 27% of the total world energy output and more than 39% of electricity energy are generated by coal-fired power plant. This shows that the coal industry gives a high contribution for the world energy resources. As one of the biggest exporter of coal that mostly exported to China and India, Indonesia is unfortunately relying much on the international market. This study will assess the financial performance of PT Adaro Energy Tbk (Adaro) as the second-biggest producer of coal in Indonesia‘s coal industry and 78% of its production of coal goes to the international market which makes the company relying much to the international market. It will be compared to its top four biggest competitors based on the production volume that are PT Bumi Resources Tbk (Bumi Resources), PT Indo Tambangraya Megah Tbk (Indo Tambangraya Megah), Indika Energy Tbk (Indika Energy), and PT Bukit Asam (Persero) Tbk (Bukit Asam). The assessment will be done with the Financial Ratio Analysis and DuPont System of Analysis. Three types of analysis will be used which are Time Series Analysis used to analyze PT Adaro Energy Tbk‘s own financial performance trend, Cross Section used to compare PT Adaro Energy Tbk‘s performance to its competitors and the Combined Analysis used to compare PT Adaro Energy Tbk to industry average. Data from 2011 – 2014 will be used in this study. The study will focus on the effect of fluctuated Average Selling Price (ASP) of coal which caused by the decreasing of the coal demand of China as the biggest coal consumers in the world that lead to the excess supply of coal in the international market and the President‘s Economy Policy Package of generating 35.000 MW Power Plant which started in 2014 in Indonesia on the financial performance of PT Adaro Energy Tbk compared to its competitors‘ performances. The study‘s objective is to assess the financial performance of PT Adaro Energy Tbk and to propose some recommendations that can improve PT Adaro Energy Tbk‘s performance. The result of this study shows the performance of PT Adaro Energy Tbk is descending in 2010 to 2014. The Return on Asset (ROA) and Return of Equity of the company were signifanctly decreasing and also under the Industry Average. Nevertheless, PT Adaro Energy Tbk is outstanding in some aspects compared to its Industry Average and also competitors. PT Adaro Energy Tbk could still generate profits unlike PT BUMI Resources Tbk and Indika Energy Tbk that suffered a loss in the end of year 2014. PT Adaro Energy Tbk also still can gain higher Price Earnings Ratio and still distributes dividends per year to the investors and the shareholders.