Astra steps up business diversification<\/p>\n
JAKARTA (JP): PT Astra International has been stepping up its
\nbusiness diversification into agribusiness and infrastructure
\nsuch as power generation, telecommunications and toll roads to
\nreduce its vulnerability to the highly volatile car market.<\/p>\n
Astra's Chairman A.R. Ramly told a luncheon meeting with the
\nmass media yesterday that Astra last year recorded the best ever
\nfinancial performance in its 38-year history.<\/p>\n
Ramly did not elaborate on Astra's earning performance because
\nthe 1994 report has yet to be submitted to its shareholders. But
\nsecurities analysts estimated its net profits last year to be in
\nexcess of Rp 250 billion (US$114 million), up markedly from Rp
\n132.4 billion in 1993.<\/p>\n
Ramly attributed the impressive performance to a higher
\noperational efficiency and the decline in bank interest rates
\nwhich spurred the automobile market.<\/p>\n
Astra, one of the largest companies listed on the Jakarta
\nstock exchange, derives around 70 percent of its income from the
\nautomobile industry. The company holds about 55 percent of the
\ntotal car market and is the market leader in motorcycles.<\/p>\n
However, the figures show the high vulnerability of Astra's
\nearnings to the car market which tends to fluctuate according to
\nthe developments in loan interest rates.<\/p>\n
When credit interest rates declined sharply in 1990, Astra's
\nnet earnings rose steeply to Rp 237.5 billion but the profits
\nplunged to a mere Rp 81.5 billion in 1992 from Rp 210.2 billion
\nin 1991 due to a steep increase in interest rates.<\/p>\n
Credit rates have of late been on an upward trend due partly
\nto the government policy of dampening the growth of the economy
\nwhich has been showing early signs of overheating with strong
\ninflationary pressures.<\/p>\n
Diversification<\/p>\n
"We are fully aware of the vulnerability of the automobile
\nmarket to bank interest rates. That is why we have been
\naccelerating our business diversification," Astra's Financial
\nDirector Rini Soewandhi said.<\/p>\n
Astra's Senior Vice President B. Subianto said last year Astra
\nhad increased its shareholdings in 36 tree-crop plantations in
\nSumatra, Java and Kalimantan.<\/p>\n
Most of the 108,000 hectare plantations (mostly oil palm
\nestates) will start bearing fruit within the next few years,
\nSubianto added.<\/p>\n
Ramly said that Astra also is increasing its stakes in the
\nrapidly growing infrastructure sector, notably power generation,
\ntelecommunications and toll road development. He did not give
\nfurther details.<\/p>\n
Rini said Astra's financial service division also is quite
\npromising and will steadily increase its contribution to the
\ncompany's bottom line.<\/p>\n
"We hope the new businesses will eventually strengthen the
\nstructure of our earnings," Rini added.(vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/astra-steps-up-business-diversification-1447893297",
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