Indonesian heavy equipment and mining services company PT United Tractors Tbk expects its coal-related operations to recover in the second half of 2026 after the government approved a higher production and sales quota, although weather-related logistics disruptions remain a risk to the outlook.

The company's coal business had been hit by a sharp reduction in its 2026 mining quota, weighing on mining contractor activity and heavy equipment sales. Its coal allocation was initially cut to 7.4 million tonnes from an original plan of 15 million tonnes in April, according to a report cited by Bisnis Indonesia.

The revised quota for coal sales by United Tractors' subsidiary PT Tuah Turangga Agung (TTA) has since been raised to 9.6-9.8 million tonnes, with the company targeting completion by year-end.

"The coal mine has begun to show improving activity following the RKAB revision," United Tractors President Director Hadiantoro said at the company's Public Expose Live 2026 on September 7.

United Tractors, part of Astra International, has been particularly exposed to the government's tighter coal production controls because its mining services operations and heavy equipment sales are closely linked to coal output.

The increase in the government's RKAB allocation, which sets annual mining work plans and production quotas, is expected to support activity at mining contractor PT Pamapersada Nusantara, or PAMA, as well as demand for heavy equipment.

PAMA's coal production rose 10% month-on-month to 13 million tonnes in July, while Komatsu heavy equipment sales jumped 31% to 399 units, according to BRI Danareksa research cited by Bisnis Indonesia.

However, coal logistics remain a key downside risk.

United Tractors' internal coal sales fell 28% month-on-month to 746,000 tonnes in July, partly because of logistical constraints on the Barito River in Kalimantan. BRI Danareksa analyst Erindra Krisnawan said the disruption remained within historical seasonal patterns but could become more severe if river water levels fail to recover in October and November.

The river is an important transport route for coal from mines in Kalimantan, meaning prolonged low water levels could restrict barge loading and delay deliveries to ports. The issue adds a weather-related constraint to a market already being affected by regulatory limits on coal production.

United Tractors' management has also flagged El Nino-related weather conditions in Kalimantan as a factor that needs to be monitored through the remainder of the year.

The company's coal recovery comes as Indonesia's broader coal industry continues to adjust to tighter production controls and changing export conditions. While the revised RKAB allocation should provide some relief for miners and contractors, actual coal output and shipments could still be constrained by weather and logistics.

United Tractors' consolidated revenue fell 15% year-on-year to 58.3 trillion rupiah ($3.3 billion) in the first half of 2026, while net profit excluding non-recurring items dropped 48% to 4.3 trillion rupiah.

United Tractors said it would focus on operational efficiency at the geothermal project and would not provide additional capital or shareholder loans.

Despite the challenges, the company expects the combination of higher coal allocations, improving mining activity and the recovery of Martabe gold production to support a gradual improvement in second-half performance.