During its 1H25 earnings call on Wednesday (August 6), Darma Henwa (DEWA) management unveiled a comprehensive overview of its financial and operational performance, coupled with a forward-looking strategy. While the second quarter presented unique challenges, the company is positioning itself for a robust second half, bolstered by new equipment and a clear financial restructuring roadmap.

Operational Performance: Rainfall Dampens Q2 Output

Weathering the Storm: Q2 2025 Operational Dip

DEWA’s revenue saw a modest -3.8% quarter-on-quarter (QoQ) decline in 2Q25, primarily attributed to a higher-than-expected rainfall. This meteorological challenge acted as a drag on the company’s operational throughput, affecting overall material movement. In 2Q25, Darma Henwa recorded an overburden volume of 33.4 million bcm (a -4% QoQ reduction) and coal production of 4.2 million tons (remaining flat QoQ). Consequently, the total material moved slipped by -4% QoQ, landing at 36.6 million bcm. This highlights the inherent volatility faced by mining operations susceptible to natural elements.

H2 2025 Outlook: New Equipment Fuels Margin Growth

Deployment of Heavy Artillery: Boosting EBITDA Prospects

Looking ahead, DEWA management anticipates a significant operational uplift, driven by the strategic deployment of its second batch of heavy equipment. This new fleet is currently on site and undergoing assembly. The company expects three pairs of these critical assets to commence operations by early September 2025, with the remainder slated for October 2025. This timely infusion of capacity is projected to be a powerful catalyst, potentially expanding the company’s EBITDA margins in the upcoming quarters.

Management projects internal overburden volumes to rebound sharply in 3Q25, targeting 19.98 million bcm (a substantial +47.1% QoQ surge from 2Q25’s 13.58 million bcm). This momentum is expected to continue into 4Q25, with an anticipated volume of 23.54 million bcm (a further +17.8% QoQ increase from the 3Q25 expectation). However, investors should note that DEWA also plans to undertake an impairment of fixed assets and inventory in 3Q25, a common financial adjustment that reflects asset value alignment.

Financial Restructuring: Clearing the Deck for Growth

Strategic Balance Sheet Enhancement

In a move to strengthen its financial position, DEWA will convene an Extraordinary General Meeting of Shareholders (EGMS) on September 10, 2025. The primary agenda is to seek shareholder approval for the elimination of its negative retained earnings balance. This financial maneuver will involve adjusting the retained earnings account with foreign currency translation accounts, a clear signal of management’s commitment to optimizing the balance sheet and improving financial optics.

Long-Term Vision: Gayo Mineral Resources Update

Unlocking Future Potential: Phased Exploration

Beyond immediate operational improvements, Darma Henwa is also laying the groundwork for future growth through its Gayo Mineral Resources project. Management confirmed that the company is prioritizing exploration efforts on two of the eight pits within this valuable concession. The findings and JORC-compliant resource statements are expected to be announced progressively from 2027 onwards, indicating a methodical approach to unlocking the long-term value embedded in these assets. This strategic exploration underscores DEWA’s commitment to sustainable expansion and resource diversification.