AOP to acquire more parts makers

AOP to acquire more parts makers

Rendi A. Witular, Bogor

Automotive component producer PT Astra Otoparts (AOP) plans to
focus on expanding its domestic business next year by acquiring
smaller component companies and factories, and increasing output,
the company's senior official said.

AOP finance director Widya Wiryawan said the company plans to
allocate some Rp 300 billion (US$33 million) for capital
expenditure (capex) next year, in order to support the expansion
of its replacement component business.

"For next year, we may allocate capex amounting more or less
similar with this year. The funds will be used to increase our
production facilities, buying component factories and companies,"
said Widya recently.

Widya explained that since early this year, the company had
acquired a few smaller component producers, such as PT Mopart
Jaya Utama in August, and production facilities, such as those in
Sidoarjo, East Java in February.

The publicly listed company has also diversified its
production lines, such as producing ball joint and tie-rod, floor
shift transmission for Avanza and Xenia van, shock absorbers for
Honda Supra motorcycle. The company has also developed new
painting facilities for motorcycle maker PT Astra Honda Motor.

To finance the projects, AOP has already spent, as of August,
some Rp 150 billion of this year's total capex allocation of Rp
300 billion.

Widya said the company, which currently has 24 subsidiaries,
would consider seeking for external financing scheme next year to
support its expansion plans if its capex was deemed inadequate.

In the first six months of this year, AOP recorded a currency
loss of Rp 30.9 billion, from a profit of Rp 11.4 billion in the
same period of last year. The currency loss is mainly due to a
drop in the value of the rupiah against the U.S. dollar, which
increases the company's dollar-denominated debt burden.

The loss has reduced the company's net profit to Rp 108.3
billion in the first half of this year, as against Rp 132.3
billion in the corresponding period of last year.

Widya said the company does not hedge its dollar-denominated
debts, totaling $21 million, against currency fluctuation because
of the high hedging cost.

Automotive conglomerate PT Astra International owns 86.45
percent shares in AOP, while the remaining 13.55 is owned by the
public.