Indocement's net revenues up slightly

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)