Geo Energy Resources (RE4) Q3 2023 earnings summary

Executive summary

• 3Q2023 revenue was US$111.0m, down 33% YoY, and net profit was US$11.5m, down 68%, reflecting lower coal sales volume and average selling prices.

• 9M2023 revenue was US$350.8m, down 34% YoY, and net profit was US$39.5m, down 72%.

• On 18 October, a 58.65% controlling stake in GEE and a 33% stake in MBJ were acquired; subject to conditions and options, the stakes may rise to 75% and 58.70%, respectively.

Financial highlights

• 3Q gross profit was US$15.8m, down 71% YoY, and profit before tax was US$17.1m, down 66%; 9M gross profit was US$63.8m, down 69%, and pretax profit was US$61.3m, down 70%.

• 3Q EBITDA was US$22.6m versus US$59.8m YoY, with a 20% margin; 12-month trailing EBITDA was US$139.5m versus US$346.5m.

• 3Q other income rose 202% to US$4.3m, mainly from foreign-exchange gains; other expenses were US$0.1m versus US$3.7m YoY.

• 9M operating cash flow was negative US$23.8m versus positive US$120.9m YoY.

Outlook and guidance

• Near-term coal prices were expected to strengthen on positive demand-supply dynamics; 9M average ICI4 was US$64.33 per tonne and remained above pre-COVID levels.

• South Sumatra and MBJ infrastructure plans aim to improve operating efficiency and support production ramp-up to 25m tonnes per annum; additional infrastructure capacity could serve surrounding mines of up to 25m tonnes annually.

• Cash of US$179.4m at 31 October 2023 was cited as supporting operational ramp-up; successful execution of plans was expected to support the ambition of becoming a billion-dollar business.