AOP 2003 net profit falls 19.84 percent

Zakki Hakim, The Jakarta Post, Jakarta

The country's largest automotive parts producer PT Astra Otoparts (AOP) announced on Wednesday a 19.84 percent drop in 2003 net profit mostly because of the company's move to produce low-cost components for cheap Multi Purpose Vehicles (MPVs).

AOP, a unit of automotive company PT Astra International, said its consolidated net profit in 2003 dropped to Rp 206.4 billion (US$24.24 million) from Rp 257.4 billion in the previous year.

AOP president Budi S. Pranoto said that the company had been supplying cheaper components for Astra's popular MPVs: Toyota Avanza and Daihatsu Xenia, which were launched late last year.

"(In preparation for the cheap MPVs)...our counterparts have told us to reduce component prices by 30 percent for the last four years," he said, adding that at the same time raw material costs had consistently increased.

He said that if AOP could not comply, competitors from neighboring countries would certainly take over the business.

"There's nothing we can do, but to comply as (component producers from) neighboring countries like Thailand will take over if we can't," he announced during a press conference.

AOP said that total sales increased by 4.3 percent to Rp 2.15 trillion from Rp 2.06 trillion in 2002, as sales volume was helped by the increased sales of cars and motorcycles in 2003.

The increase was attributed to a 8.5 percent jump in original equipment manufacturing (OEM) and a 7.6 percent increase in the sales of batteries, chains and rubber-based components.