Sat, 10 Jul 2004

Gresik H1 cement sales up 20%

The Jakarta Post, Jakarta

The country's largest cement producer, PT Semen Gresik (SG), said sales surged by 20 percent in the first half of this year, driven primarily by soaring demand from government-sponsored projects in East Java.

SG corporate secretary Soebagyo said sales, excluding those from subsidiaries PT Semen Padang and PT Semen Tonasa, had soared to around 3.5 million tons in the first half of this year from round 2.9 million tons in the same period last year.

"Our sales have been boosted by massive government projects currently under construction in East Java," said Soebagyo, before attending a seminar held by the Indonesian Association of Listed Companies (AEI) on Friday.

He said that the projects included the 5.4-kilometer Suramadu bridge, which would link Java with Madura island, the development of Juanda International Airport and the construction of Surabaya outer ring road.

For the Rp 2.83 trillion (US$350 million) Suramadu project, which will be the longest bridge in Indonesia, the publicly listed cement firm was appointed by the developer as sole cement supplier to provide around 300,000 tons of cement over the next four years.

According to Soebagyo, the cement sold to the developer was priced at around Rp 400,000 per ton.

Soebagyo also said that SG's local market share had increased to 23 percent, from 21 percent at the end of last year.

With regard to a plan by Semen Padang to set up a new plant that will cost $345 million, Soebagyo said that construction was likely to start after the runoff presidential election in September.

In a bid to finance construction of the plant, SG was currently seeking a suitable financing mechanism with an option to borrow from banks or issue bonds.

"We are still discussing the plan. Until now no decision has been taken," he said.

West Sumatra-based Semen Padang plans to construct a new plant that will have an installed capacity of 2.3 million tons per year. Construction is expected to be concluded in 36 months.

Semen Padang said the reason for construction of the new plant was to anticipate soaring demand, both at home and in the export market, starting in 2009 or 2010.