Geo Energy Resources (RE4) Q1 2023 earnings summary

Executive summary

• Q1 revenue fell 13% YoY to US$131.9m and net profit declined 60% to US$16.0m, as lower sales volumes and higher costs outweighed a 12% increase in ASP.

• Cash and bank balances were US$208.6m at 31 Mar 2023; a 0.5 Singapore cent per-share interim dividend was declared, and acquisition plans advanced.

Financial highlights

• Gross profit fell 51% YoY to US$27.9m; profit before tax declined 54% to US$25.7m.

• EBITDA was US$31.7m versus US$61.3m, with a 24% margin; net profit was US$16.0m versus US$40.5m.

• Income tax expense was US$9.7m; the effective tax rate rose to 38% from 27%, mainly due to withholding taxes on dividends declared by Indonesian subsidiaries.

• Operating cash flow was negative US$19.1m versus positive US$19.6m YoY, including US$14.1m of income tax paid.

• Revenue decline reflected a 23% drop in sales volume, partly offset by a 12% increase in ASP.

Outlook and guidance

• Active progress on value-accretive acquisitions of producing coal mines aims to expand reserves and production and diversify revenue streams; further announcements are expected if investments materialise.

• Coal prices were expected to remain strong in 2023; the M42 Futures Index forecast an average US$71.413/t for the rest of 2023, and ICI4 was US$71.39/t on 11 May.