Hexindo Adiperkasa diversifies its business

JAKARTA (JP): PT Hexindo Adiperkasa, a publicly listed heavy machine distributor, announced yesterday that it was preparing to become a builder and reconditioner of coal mines.

Hexindo's vice president, Husni Effendy, told journalists that its diversification plans were approved by shareholders in an extraordinary meeting yesterday.

"It doesn't mean that we will change our business. On the contrary, we must diversify our business in efforts to strengthen our position," Husni said.

He said the company expects to start the new businesses next year. In the meantime, it is still looking for strategic partners in coal mining.

Husni would not reveal details of the plans, such as names of potential partners or where investment would originate.

He did confirm that Hexindo would not raise capital for the businesses through the stock market.

"For the reconditioning business, we will get financial support from our principal companies -- Hitachi Construction Machinery Co. Ltd. and Itochu Corporation, both of Japan," he said.

According to Husni, Hexindo boasts a 25 percent share of the domestic heavy machine market, due mainly to sales of its Hitachi hydraulic excavators.

He said hydraulic excavators currently accounted for about 60 percent of the domestic heavy machine market.

"We expect a 26 percent growth in sales this year and hydraulic excavators to remain the major contributor to our sales' revenue," he said. "With about 700 units to be sold, it will account for 75 to 80 percent of our total sales."

Besides hydraulic excavators, Hexindo sells wheel loaders and forklifts.

Domestic demand for heavy equipment is estimated to grow by 17 percent this year.

In the first quarter of 1996, Hexindo made net sales of Rp 52 billion (US$22 million), indicating a 68 percent increase over the same period last year. Its net profit rose 85 percent to Rp 3.9 billion over the same period.

Husni said the company's net sales in 1995 reached Rp 200 billion compared to Rp 151 billion in 1994.

Net profit also increased from Rp 7.8 billion in 1994 to Rp 13 billion in 1995.

He said that Rp 3.3 billion, or 25 percent of net profit, has been allocated for dividends for which shareholders will receive Rp 80 per share. (alo)