Astra net profit in 2004 could increase 10 percent

Rendi A. Witular, The Jakarta Post, Jakarta

Publicly listed automotive company PT Astra International's 2004 net profit is likely to increase by at least 10 percent on the back of higher sales of its automotive products and a gain from the sale of key assets.

"Our consolidated profit in 2004 may increase by at least 10 percent. We are still finalizing the figure," said Astra finance director John Slack on Monday.

Astra recorded a profit of Rp 4.4 trillion (US$488 million) in 2003. With a 10 percent increase, Astra's profit is estimated to reach Rp 4.84 trillion in 2004.

Slack also said the company's sales were estimated to reach at least Rp 31 trillion last year from Rp 31.5 trillion in 2003, on stronger car and motorcycle sales.

Astra sold 154,514 cars in the January-September period last year, or 38 percent more than the same period of 2003. Motorcycle sales in the nine-month period rose 30 percent to 1.54 million units.

According to Slack, last year's higher profit was also attributable to windfall profit of Rp 590 billion from a gain on the sale of telecommunications firm PT Pramindo Ikat Nusantara.

Pramindo is a partner of Sumatra's PT Telkom under a joint operation scheme (KSO) and was recently bought out by Telkom. Prior to the acquisition, Astra had a 59.5 percent stake in the firm.

Astra -- with more than two-fifths of its shares owned by Singapore's Cycle & Carriage -- now operates in the automotive, agribusiness and financial services sectors.

For this year, the company plans to allocate some $25 million for capital expenditure for its automotive businesses. Most of the funds would be used to expand the capacity of its car and motorcycle assembly plants.

Slack said that the company might not enjoy higher profit growth this year as compared to 2004, due to an anticipated increase in production costs following the government's plan to raise fuel prices in the first quarter amid a projected higher inflation rate.

The situation would be exacerbated by stiffer competition in the automotive market, as more producers and distributors would race to release new cars at a lower cost, despite an estimated increase in volume, he added.

Slack explained that in order to compensate for the tougher environment in the automotive industry, Astra has been planning to focus more on expanding its component and plantation businesses by acquiring new companies or plantations and expanding production output.

"I hope our plantation unit PT Astra Agro Lestari and our component maker subsidiary PT Astra Ottoparts can do a lot this year to improve the company's performance," he said.

Astra shares ended lower by Rp 50 to Rp 9,750 on the Jakarta Stock Exchange on Monday.