AKR expects 2005 net profit to increase by 51 percent

The Jakarta Post, Jakarta

The country's largest bulk chemical producer and distributor, PT AKR Corporindo, projects a 51 percent jump in its net profit this year from the previous year, betting on continued strong demand and higher chemical prices.

The company's senior manager for investor relations, V. Suresh, said in a statement that AKR expected a net profit of Rp 115 billion (US$12.1 million) in 2005, compared to Rp 76 billion posted the year before.

The company produces sorbitol -- a basic raw material in the production of toothpaste, vitamin C, surfactants, food products, etc. -- and its derivatives at plants in East Java and China's province of Guang Xi. Aside from serving the domestic markets of Indonesia and China, the products are also exported to more than 60 countries worldwide.

At present, the company is the largest sorbitol producer in the Asia Pacific and the second largest in the world.

In Indonesia, the company also supplies basic chemicals, organic and inorganic chemical and solvents to over 2,000 industrial customers.

The company holds 90 percent of the Indonesian sorbitol market and 30 percent of the Chinese sorbitol market.

Suresh said the company had raised its projected profit this year because of expected strong sales volume, projected to rise 28 percent from Rp 2.1 trillion last year to Rp 2.8 trillion in 2005, on the back of expanding industrial activities in Indonesia and China.

"AKR also plans to spend Rp 237 billion in capital expenditures this year, a 61 percent increase from last year," Suresh said.

He said this year's capital expenses would be used to build two tapioca flour plants in China and Indonesia, at an estimated cost of Rp 47.5 billion each.

Tapioca flour is the basic ingredient for sorbitol.

The remaining Rp 142 billion will be used to expand the firm's logistics capabilities by financing the construction of petroleum product storage and transportation facilities in Jakarta and Surabaya, Suresh said.

"Logistics now only contribute about 3 percent to revenue, but in a couple of years it should be about 10 to 15 percent," said Suresh.

In a shareholders meeting last week, the company agreed to issue a dividend of Rp 40 per share, or Rp 24.96 billion, which will represent a payout of 32.8 percent of its net profit in 2004.

Last year it paid a total dividend of Rp 10.4 billion, an increase from 2003's Rp 5.2 billion dividend. (002)