Astra Agro: 2003 sales to grow 15%

Astra Agro: 2003 sales to grow 15%

Dow Jones, Jakarta

Indonesia's PT Astra Agro Lestari expects sales to rise around 15% this year, due to a projected increase in crude palm oil production and export volume.

"We forecast our sales this year to grow by up to 15%," Astra Agro Vice President Benny Tjoeng told Dow Jones Newswires in an interview Friday.

The company expects sales last year to have surged nearly 40% to IDR1.98 trillion from IDR1.42 trillion in 2001, mostly due to a significant increase in crude palm oil prices, which rose to about $463 a ton in December 2002 from around $329 a ton a year earlier.

Tjoeng also expects the price of the commodity to further strengthen this year due to a prolonged dry spell in Indonesia and Malaysia, and increased demand from China.

"But the increase of the CPO price this year, I expect, won't be that as high as last year's," he said.

Analysts expect palm oil output to fall during the first half of the year due to drier-than-normal weather caused by the current El Nino weather phenomenon during Indonesia's October- February growing season. The drop in output is expected to cause prices to rise.

Tjoeng said that in a bid to maintain sales growth, the company will increase its crude palm oil production output by at least 10% this year to around 600,000 metric tons, from an expected 544,000 tons in full year 2002.

Astra Agro currently has 189,000 hectares of palm oil plantation. Almost 100% of the plantation is ready for harvest or has matured.

To support the sales growth, the company will also strive to increase its export volume to 20% this year, compared with an expected 12%, or around 65,000 metric tons, last year, Tjoeng said.

"We see that we can increase our exports to India, Pakistan and some countries in Europe," he added.

Tjoeng said Astra Agro also plans to build two new palm oil refineries in Central Kalimantan and South Sulawesi provinces.

The first in Central Kalimantan will have capacity of 60 tons of fresh fruit bunches per hour, with investment of around $5 million.

The second in South Sulawesi will have capacity of 20 tons of fresh fruit bunches per hour, with investment worth around $2 million, he added.

Tjoeng believes the development of such refineries will further support Astra Agro's growth in the year ahead.

He said the company will narrow its business focus to concentrate on the palm oil industry in the future. Astra Agro plans to sell non-core businesses, such as tea, rubber and cocoa plantations units, by 2007.

"We are still in the preliminary steps to sell such non-core assets," he said, without elaborating.

Astra Agro is controlled by Indonesian auto group PT Astra International. Late last year, the car manufacturer said it had signed an $850 million debt restructuring deal with its creditors, which included the sale of assets such as its stake in the plantations group. However, the parent company later said it doesn't plan to sell its shareholding in Astra Agro, which it considers a valuable asset.