Bakrie Sumatra Plantation projects 20-30% profit growth

JAKARTA (JP): PT Bakrie Sumatra Plantation, the agroindustry arm of the Bakrie Group, projects a profit growth of between 20 percent and 30 percent this year despite the decreasing trend in world rubber prices, it said yesterday.

Company director Sahat M. Sinaga said that to reach this profit target, the company would boost its rubber sales volume through efficiency programs including raising the productivity rate of its rubber plantations.

He said the company projected producing 24,000 tons of rubber this year, up 4 percent from 22.955 tons in 1996.

"Last year, rubber prices also decreased. Still, we increased profit because our rubber plantations' production rate grew," he said after the extraordinary and general meetings of the company's shareholders.

Bakrie Sumatra Plantation had increased its plantations' productivity rates to 1.6 tons per hectare in 1996 from 1.5 tons a hectare in 1993.

"We managed to increase production without adding operating cost," he said.

Simon said the benchmark RSS1 rubber prices dropped to US$1.35 a kilogram in 1996 from $1.5 a kilogram in 1995. RSS1 rubber prices further dropped to $1.06 kilogram in the first quarter of this year.

The company increased its net profit 29 percent to Rp 43.1 billion in 1996 although its net sales dropped 0.56 percent to Rp 559 billion that year.

Other company director, James M. Belcher, said the decrease in the world's rubber prices was due to an oversupply on the world market.

"The gap between the supply and demand ranges between 50,000 and 60,000 tons (a year)," he said.

Belcher said some newcomer countries had planted rubber several years ago when the commodity hit a high price.

He predicted rubber prices would go up on the long run with the automotive industry's increasing demand for natural rubber to make tires.

Bakrie Sumatra Plantation operates rubber, cocoa and oil palm plantations, but its main business is rubber which contributed to more than 97 percent of its total 1996 sales.

The company operates 37,984 hectares of rubber, cocoa, and oil palm plantations in Kisaran, North Sumatra; Pasaman, West Sumatra; and Tanjung Jabung, Jambi.

It also operates a rubber processing plant in Kisaran and a palm oil factory in Pasaman.

The company also owns 75 percent of the shares of Lewis and Peat Rubber, one of the world's largest natural rubber dealers with companies in London, Singapore and Middlesbury, the United States.

The company is set to expand its oil palm business by opening an 88,000 hectare oil palm plantation in Sanggau, West Kalimantan this year. It is also building a cooking oil factory in Karawang, West Java, which is due to be completed later this year.

The company said yesterday it would distribute 36 percent of its 1996 net profit, amounting to Rp 15.54 billion, in dividends, or Rp 75 per share.

The company has made a stock split of one to two shares by lowering the nominal value from Rp 1,000 to Rp 500. Shareholders will receive nine bonus shares for every five old shares.

The company also announced yesterday the replacement of A Hanif Bakri with Hari Witono as its president director. (jsk)