Astra sees profit if rupiah stays below 9,500 to dollar

JAKARTA (JP): Publicly listed auto manufacturer PT Astra International said it was hoping to end the year in profit, despite a first half net loss of Rp 993.1 billion (about US$103 million), providing the rupiah strengthened to below Rp 9,500 to the dollar.

Astra corporate secretary Aminuddin said on Wednesday the company was expecting a turn around in this year's second half on the back of a stronger rupiah.

"Although we've pegged our car prices at 9,000, with the rupiah at below 9,500 we can still realize profits," he told The Jakarta Post.

Aminuddin said the company had booked a net profit of Rp 1.5 trillion in 1999, when the rupiah averaged 6,900 throughout the year.

According to him, the company's main woes stem from the weak rupiah, which offsets any gains Astra makes on higher car sales.

In the first six months, Astra's net loss surged to Rp 993.1 billion compared to Rp 702.5 billion in the first half of 2000.

In the same period, however, sales rose to Rp 14.5 trillion as against Rp 12.86 trillion.

Foreign exchange losses are also due to the company's huge dollar denominated debts. Astra made huge debt installments earlier this year when the rupiah was already edging toward 10,000 to the dollar.

The next installment, however, is not due until December 2002. By then, the company will have to pay 25 percent of its combined loans and bonds worth $695 million and Rp 819.26 billion.

Astra has earlier said it was considering hedging up to 20 percent of its $800 million in debts.

The rupiah on Wednesday trading weakened to 9,600 down from 9,525.

Currency analysts said improved political stability allowing economic reforms to progress could keep the rupiah from falling back into the 10,000 territory.

Astra was also planning to sell off its palm plantation unit, the publicly listed PT Astra Agro Lestari, to help finance its debt payments, Aminuddin continued.

One of the buyers strongly rumored to purchase Agro Lestari is the country's giant noodle producer PT Indofood Sukses Makmur.

"We're negotiating, but it's still very informal," Aminuddin said.

Indofood said earlier it was eyeing Agro Lestari, following setbacks in its initial plan to purchase the Singapore listed Golden Agri Resources of the Sinar Mas Group.

The plan could ran aground on Golden Agri's tardiness in conducting a due diligence. Indofood has set August 10 as the deadline for the due diligence.

Aminuddin said Astra would sell to Indofood should the latter offer the right price and has potential to become the right partner for Agro Lestari.

However, he added, Indofood was not the only party that had approached Astra and expressed interest in buying Agro Lestari.

"We've been approached by several parties, though I can't say whether they're local or foreign," he said.

Local media reported that Astra's majority shareholder, the Singapore-based Cycle & Carriage, had set a price of 2,500 a share for Agro Lestari.

"We don't know how they got that price. We need to see details to know whether the price is fair ... we need to do a really detailed due diligence," Indofood's deputy chief executive officer Cesar De La Cruz was quoted as saying by Bloomberg.

He said the company was also considering other plantations as alternatives should Golden Agri miss its Aug. 10 deadline.

"London Sumatra, in terms of the plantation itself, is one of the best in the country," he said.

But like Golden Agri, London Sumatra is saddled with $254 million in debts for which it had yet to seek a restructuring deal.

"We are aware of London Sumatra's problem, and understand that every plantation company has their individual problem," De La Cruz said.(bkm)