Forex losses a 'time bomb' for listed firms

JAKARTA (JP): At least 166 of the country's 289 listed companies toppled into the red last year due to massive foreign exchange losses, the Indonesian Business Data Center (PDBI) reported yesterday.

They suffered total foreign exchange losses of Rp 18.6 trillion (US$4 billion in December last year), PDBI said.

Chief research officer Beni Sindhunata said in a statement the companies incurred total losses of Rp 9.7 trillion in 1997 despite the more than 23 percent increase in combined turnover of Rp 108.3 trillion.

Total assets of the 166 companies were Rp 248 trillion, or equivalent to 40 percent of the country's 1997 gross domestic product.

He said there were seven companies with individual forex losses of more than Rp 500 billion; 35 companies each suffering between Rp 100 billion and Rp 500 billion; and 124 companies under Rp 100 billion.

Data was based on PDBI's latest evaluation on the impact of the currency crisis on 215 publicly listed companies, excluding banks and financial institutions.

PDBI said 25 of the companies booked profits of Rp 545 billion despite the crisis, while data on 23 companies was either unavailable or their relatively small forex losses had been capitalized into fixed assets.

Companies which benefited from the sharp drop in the rupiah against the U.S. dollar included PT Pindo Deli Pulp and Paper, PT Indosat, PT Petrosea, PT Citra Marga Nusaphala Persada, PT Rig Tender Utama, PT Intan Wijaya Chemical Industry, PT Citra Tubindo, PT Panasia Filament Inti and PT Pabrik Kertas Tjiwi Kimia.

PDBI said that although the total turnover of the 215 listed companies reached Rp 340 trillion -- equivalent to 54 percent of GDP -- total debts were Rp 240 trillion, 43 percent of which was short term.

"This means an average debt to equity ratio of 2.6 times, which practically has sent the companies into bankruptcy," Beni said. He added that 14 companies already had a negative equity level of between Rp 14 billion and Rp 306 billion.

Forex losses would be even larger if overseas debts were calculated at the June exchange rate level of about Rp 15,000 to the dollar.

"This is a time bomb and bad news for stock investors," he said.

Announcement of 1998 results would reveal the full scope of the problem, he added.

But he stressed that companies could still recover through prudent steps.

"This depends on the strategy of the CEO and chief finance officer to deal with their foreign currency debts," he said.

PDBI concluded that the sharp depreciation of the rupiah had rendered the country's listed companies cheap because the total equity of Rp 91 trillion was only valued at $6 billion.

"This is an opportunity for foreign investors to acquire Indonesian companies at bargain levels."

He recommended that local companies could form partnerships with foreign strategic partners to survive the crisis.

He also suggested that companies should look for ways to convert foreign currency debts into rupiah-denominated one.

The rupiah, which was around 2,450 to the dollar in July last year, has since lost about 80 percent of its value. (rei)