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.