Fri, 01 Aug 2003

Blue-chip firms report lower profit

Rendi A. Witular, The Jakarta Post, Jakarta

Car maker PT Astra International and cigarette producer PT Gudang Garam, both blue-chip companies on the Jakarta Stock Exchange, reported on Thursday a lower first semester net profit, dragging down the overall stock index.

But thanks to optimism arising from the better-than-expected first-half profit of state-owned telecommunications company PT Telkom, a further plunge in the index could be avoided.

The Jakarta Composite Index was down slightly by 0.237 points to 507.98, led by a 4.5 percent decline in Gudang Garam shares, which closed at Rp 9,500, and in Astra's, which dropped by 0.7 percent to Rp 3,800.

The index rebounded during late trading from a low of 504.28 earlier in the day as Telkom shares rose by 0.6 percent, to Rp 4,400 after the announcement that net profit in the first six months of this year had increased by 13 percent to Rp 3.78 trillion, from Rp 3.36 trillion in the same period of last year.

The jump in Telkom's profit was mostly contributed to its fixed-line unit, with profit increasing to Rp 3.44 trillion from Rp 3.06 trillion, and its cellular unit, which saw profit rise to Rp 2.83 trillion from Rp 1.94 trillion.

Telkom is the largest counter in the stock market, some analysts said that every one point movement in Telkom shares moves the index by around 17 percent.

Gudang Garam and Astra are also among the largest counters, contributing around 8 percent and 6 percent to the market capitalization respectively.

Gudang Garam announced that its first-half net profit fell by 16 percent to Rp 911 billion from Rp 1.08 trillion in the same period last year, although its sales rose to Rp 11.3 trillion from Rp 10.4 trillion.

Analyst Ella Nusantoro from PT Bahana Securities said that the decline was unexpected and was mostly attributed to the cost of sales falling to Rp 9.15 trillion from Rp 8.05 trillion.

"The rising cost of sales was mostly the result of 'subsidizing' the excise of its cigarettes so that consumers could afford to buy them," said Ella, adding that she would likely revise the company's full-year profit forecasts.

Since 1999, the government has increased the excise of cigarette five times.

Meanwhile, Astra reported an 18 percent decline in net profit to Rp 1.8 trillion from Rp 2.2 trillion although sales increased by 2.9 percent to Rp 15.7 trillion.

In a press statement Astra said that the decline was mostly attributed to lower foreign exchange revenue. Astra's currency earnings dropped to Rp 288 billion from Rp 1.3 trillion.

Automotive analyst Erwan Teguh from PT Danareksa Securities said that the drop in the currency earnings was not a concern since it did not reflect the real performance of the company.

"What is more worrisome is the fact that a large part of Astra's revenue was not derived from its core (automotive) business, but instead from its agriculture and financial subsidiaries," said Erwan.

He added that Astra's declining market share in the automotive business should also be taken seriously because it could undermine the company's full-year sale's performance.

"Because of that, we plan to downgrade Astra's core business forecast for the year-end," said Erwan.

Astra said that its market shares in the automotive business in the first semester had slightly declined to 44.2 percent, from 42.1 percent in the same period last year, due to a sales decline in its Isuzu unit.