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.