Indocement's net revenues up slightly
JAKARTA (JP): PT Indocement Tunggal Perkasa, the country's major cement producer, reported on Friday a slight increase in net revenues to Rp 1.17 trillion (about US$157 million) in the first nine months of this year, ending on Sept. 30, from Rp 1.14 trillion in the same period last year.
As result of lower domestic demand, sales volume dropped by 20 percent to 5.69 million tons during the nine month period, but the lower sales volume was offset by a 30 percent increase in the average selling price, the company said in a statement.
The statement also said that the rise in selling price resulted in a 3 percent increase in gross profit, from Rp 473.11 billion to Rp 486.862 billion.
Income from operations declined by 8 percent, from Rp 381.27 billion to Rp 352.336 billion. Operating margin declined from 33 percent to 30 percent, which is attributable to the increase in operating expenses, largely due to higher inflation and an increase in the cost in rupiah of the U.S. dollar denominated expenses.
The company reported a net income before extraordinary items of Rp 63.41 billion in the Jan. to Sept. period, compared to Rp 102.73 billion (after deducting the income and profits from the sale of PT Indofood Sukses Makmur) last year.
"This decline in the net income by 38 percent before extraordinary items is the result of financial costs," the company added.
Debt
Due to the extraordinarily high exchange rate of the rupiah against the U.S. dollar ($1 = Rp10,700) on Sept. 30, 1998, the company has capitalized the effect of its foreign exchange losses of Rp 2.497 trillion in line with its intention to state the associated assets at a fair value pending developments in the year-end exchange rate.
In anticipation of a possible tightening of its liquidity position as a result of the current economic situation in Indonesia, the company is in the process of restructuring its debt.
For this purpose, the lenders have appointed Bank of America as chairman of a steering committee, composed of the following members: Chase Manhattan Bank, Fuji Bank, Marubeni and Banque Nationale de Paris.
During the debt restructuring process, the company will not pay interest or principal to the lender. The process is expected to be completed by April 1999.
As of September, 1998, the company has unwound its swap contract of $340 million to ease its liquidity crunch.
The company is also considering selling some of its non-core assets, such as power plants, in order to concentrate on its main assets and raise cash to contribute to the restructuring of the company's debts.
The economic recession has led to a decline in the demand for cement in the domestic market. To counter the lower demand from the domestic market, the company will increase its focus on export markets such as Singapore, Bangladesh, Malaysia and various other countries, where in the early 90's the company exported as much as 3 million tons of cement annually.
The company will also explore new areas such as Africa and the United States. As of September 1998, the company's export volumes had increased by 761 percent, from 102,280 metric tons to 880,907 metric tons.
By the end of 1998, the export volume is expected to reach around 1,200,000 metric tons, and the company expects to export around 2,600,000 metric tons for the whole of 1999.
In line with this strategy, the company is considering a strategic alliance with an international cement company, to enhance export distribution channels and, at the same time, strengthen the financial position of the company. (29)