United Tractors Considers Coal Deals
United Tractors, the country’s largest heavy equipment distributor, is mulling over the acquisition of two new coal mines in Kalimantan this year to boost its coal mining revenue.
The company is in the final stage of a due diligence to acquire control of the mines and expects to reach a decision within a month, company director Gidion Hasan said on Friday.
“If the results of the due diligence are satisfying, we might continue with the acquisition process,” he said after a shareholder meeting in Jakarta. United Tractors, he added, would acquire the mines through a consortium.
The mines, which are located in East Kalimantan and Central Kalimantan, produce coal above 5,800 calories, meaning it is of better quality, he said.
Kalimantan is home to some of the country’s largest coal miners, including Berau Coal and Bumi Resources.
Gidion said the company would purchase the mines with funds from its $700 million rights issuance last year.
Coal mining is United Tractors newest business division, contributing about 10 percent of its revenue last year.
The company expects to raise its coal production to as much as 6.5 million tons from 4.5 million tons last year. The new mines in Kalimantan would not likely contribute this year, however, because they would be acquired as new “green field” projects.
Sara Loebis, a corporate secretary at United Tractors, said the company sold 1.53 million tons of coal in the first quarter this year, one million tons more than in the first quarter last year.
In its core business of heavy equipment distribution, it aims to sell 9,500 units of Komatsu brand equipment this year. Last year it sold 8,467 units with a market share of 49 percent.
The company’s market share has returned to a “normal” 44 percent, Gidion said, as its competitors recover their supply chains following the Japan tsunami in March last year.
He believes United Tractors can maintain its market share through this year and is confident Indonesia’s heavy equipment market can grow by 20 percent as a whole.
The company has allocated $500 million in capital expenditure for expansion this year, not including the potential acquisitions of the two mines.
It plans to finance most of its capital expenditure with internal cash, which currently stands at about Rp 7 trillion ($763 million), Gidion said.
The company will also distribute Rp 2.37 trillion in dividends to its shareholders this year, equivalent to 40 percent of its net income last year.
Net income at United Tractors rose to Rp 5.9 trillion last year from Rp 3.8 trillion in 2010, while its revenue climbed to Rp 55.05 trillion from Rp 37.3 trillion.
Shares of United Tractors fell 0.3 percent to Rp 31,150 on Friday. They have gained 18 percent this year, outpacing the 9 percent gain for the main stock gauge.
United Tractors is a unit of Astra International, the country’s largest automotive distributor.