Astra International may raise prices as costs increase

Astra International may raise prices as costs increase

Arijit Ghosh, Bloomberg/Jakarta

PT Astra International, Indonesia's biggest automobile assembler and distributor, says it may increase car prices to compensate for currency fluctuations and higher fuel costs.

Astra International -- which is 49.7 percent controlled by Singapore-based Jardine Cycle & Carriage Ltd. -- may raise prices if the rupiah falls to 10,000 against the U.S. dollar, Budi Setiadharma, 61, Astra's president said in an interview recently. The rupiah traded at 9,475 to the dollar on Friday.

Astra is the sole Indonesian importer and assembler for Honda Motor Co., Daihatsu Motor Co. and Isuzu Motors Ltd. The Jakarta- based company is paying more to import vehicle kits from abroad and has higher transportation costs. Astra expects sales growth to slow to 20 percent this year from 41 percent in 2004.

"For the low-end cars sold to lower to middle income (people), it (higher prices) may affect sales," said Cholil Baidowi, who helps manage the equivalent of $1.2 billion in Indonesian assets, including Astra shares, at PT Trimegah Securities. "But being a conglomerate it is resilient. It will be compensated on agricultural sales."

Astra International's shares have risen 15 percent this year outpacing a 6.4 percent gain on the Jakarta Composite Index. The shares rose 0.5 percent to 11,200 in Jakarta on Friday.

Automobile sales in Indonesia rose 29 percent in April from a year earlier, Astra said citing figures from the Association of Indonesian Automotive Manufacturers (Gaikindo). Astra and rivals sold 51,248 units in April compared with 39,813 units a year before.

"You may postpone a decision to buy a car but you will not cancel it," said Chandra Pasaribu, an analyst at GK Goh Stockbrokers Pte Ltd. in Jakarta. "In Indonesia you don't have effective public transport so you have no choice to buying a car," said Pasaribu, who rates Astra shares "buy"'.

The company expects profit to rise 15 percent this year, slower than the 22 percent increase in 2004 when it had one-time gains from selling investments, Budi said.

Astra, which is Indonesia's third-largest publicly traded company, on March 21, said net income rose to Rp 5.4 trillion (US$569 million) in 2004, from Rp 4.4 trillion a year earlier. Sales rose 41 percent to Rp 44.3 trillion.

Setiadharma said the company plans to spend as much as $50 million this year to boost production of cars such as Toyota's Avanza and Daihatsu's Xenia. The company expects to make 84,000 Avanza and Xenia units by the end of this year.

Astra International owns companies such as PT Astra Agro Lestari, Indonesia's biggest publicly traded agriculture company, PT United Tractors, a heavy equipment maker, and PT Astra Graphia a computer services company. Astra International also controls PT Bank Permata along with U.K.'s Standard Chartered Plc.