Bakrie & Brothers suffers lower net profit
Sari P. Setiogi, The Jakarta Post, Jakarta
Publicly listed PT Bakrie & Brothers, a diversified business group, said on Tuesday that net profits in the first nine months of this year plunged to Rp 26.35 billion (US$3.14 million) from Rp 99.17 billion in the same period last year.
Company president Bobby G. Umar told investors during a public meeting that the drop in net profits was because the company was unable to secure certain business contracts as the bidding process for several projects had been delayed. He cited an example at its subsidiary PT Bakrie Pipe Industries.
"Declining demand for steel also caused a significant impact on the company's performance," said Bobby.
He also said that revenue during the period declined to Rp 733.86 billion from Rp 887.59 billion.
The company operates in many fields including, telecommunications, pipe manufacture, building materials, automotive components and coal mining.
In the coming years, the telecommunications business is expected to become the main revenue contributor, providing around 65 percent of the group's total revenue, Bobby said
According to Bobby, market penetration of the national telecommunications sector was still relatively low at about 3.4 percent in the fixed-line business, and 5.2 percent in the cellular phone sector.
In the short-term period, Bakrie Telecom, through its newly- launched CDMA fixed-wireless product called Esia was expected to contribute about 25 percent to Bakrie's total revenue, said Bobby.
"This year, Esia is expected to post revenues of about Rp 181.64 billion. Next year, it is expected to reach about Rp 442.06 billion and Rp 902.88 billion in 2005," he said.
He also mentioned that Bakrie Telecom was expected to issue bonds in the first semester of next year. The funds will help finance the company's investment program worth about $53.8 million. He did not reveal the size of the bond offering.
He explained that about 70 percent of the financing needs for the investment program would come from the loan market, while the remainder would come from internal cash flows.
"About 70 percent will come from banking loans, foreign vendors as well as bonds," he said.
With the $53.8 million investment, Esia is expected to reach a customer base of 500,000 subscribers next year. In 2006, the company expects that figure to increase to 1.5 million with a total value of $73.8 million, while in 2008 it expects 3.15 million subscribers and a value of of $102.7 million.
The company also planned to add 150,000 more new networks (from the current 137,000 networks) in Jakarta and Bandung to push the performance of its other telecom service called Ratelindo.