PT Adaro Energy Tbk (ADRO)  managed to maintain substantial liquidity by generating a free cash flow of US$630 million by 2020.

Meanwhile, operational EBITDA has exceeded the target. Adaro Energy booked operational EBITDA of US$883 million in 2020, a 27% decrease compared to 2019 of US$1.2 billion.

However, the EBITDA was higher than the revised 2020 guidance of US$600 million to US$800 million. The ratio of net debt to operational EBITDA for the last 12 months was 0.19 times, and the rate of net debt to equity was 0.04 times.

Adaro Energy's President and CEO, Garibaldi Thohir, said that its performance reflects an integrated business model's resilience, thanks to its focus on efficiency and operational excellence in all business lines. Despite facing many challenges, from the global pandemic to unfavorable weather, the company could meet the revised coal production guidelines and operational EBITDA.

"Even though we predict that the global economic recovery will have a positive impact on the industry, we will remain cautious amidst the existing uncertainties," he said in Jakarta on Friday (5/3).

According to Garibaldi, the company remains focused on improving operational excellence, cost control, and efficiency and continuing to execute business continuity strategies. Last year, the company's operating EBITDA margin remained healthy at 35% due to the cost control strategy.

"Contributions from the non-coal mining business provide profit support amid difficult conditions. Adaro Energy posted operating revenues of US$2.53 billion in 2020 or a 27% decrease from 2019, mainly due to an 18% decrease in average selling price (ASP) and a 9% decrease in sales volume, "he explained.

The company recorded a 6% decrease in production volume to 54.53 million tonnes or slightly higher than the revised 2020 guidance to 52-54 million tonnes. Complicated macro and industrial conditions due to the COVID-19 pandemic are putting enormous pressure on coal demand and global coal prices in 2020.

Adaro Energy posted a 21% decrease in revenue expenses on an annual basis to US$1.95 billion as a result of a lower strip ratio and fuel prices. This year's strip ratio reached 3.84 times, or below the guidance set at 4.3 times, due to unfavorable weather conditions for most of 2020.

Coal cash cost per tonne, which excludes royalties, decreased 21% on an annual basis. This is because the company records a lower annual stripping ratio and fuel costs.

Total fuel costs decreased 45% in line with lower fuel costs per liter and lower fuel consumption in 2020. The royalties paid by Adaro Energy to the Indonesian government decreased 29% to US$271 million and in line with the decline in 2020 operating revenues.

Operating expenses were also reduced by 29% to US$165 million in 2020 compared to US$233 million in 2019. The fall was mainly due to a 45% decrease in sales and marketing expenses and a 44% decrease in professional fees.

Meanwhile, the company's core profit reached US$405 million in 2020 or decreased 36% on an annual basis due to reduced profitability. The company's total assets also fell 12% to US$6.38 billion.

Current assets decreased 18% to US$1.73 billion, primarily due to lower cash and trade receivables from third parties. Meanwhile, non-current assets decreased by 9% to US$4.65 billion, mainly due to lower investment in joint ventures, a decrease in mining properties, and a decrease in fixed assets.

At the end of 2020, the cash balance was in the position of US$1.17 billion. The company has absorbed US$169 million in capex throughout 2020, or lower than the revised capital expenditure guide of US$200 million to US$300 million.

The company used the capital expenditure in 2020 to purchase and replace heavy equipment and the development of Adaro MetCoal (AMC). This year, the company has allocated capital expenditures of around US$200 million to US$300 million.

The company will spend the 2021 capital expenditure on routine maintenance and company development. The company expects the capex to support operational EBITDA in 2021, which is targeted at US$750 to US$900 million.

Meanwhile, Adaro targets coal production at 52-54 million tons with a consolidated strip ratio of 4.8 times.