Indorama expects higher domestic sales this year
Indorama expects higher domestic sales this year
JAKARTA (JP): PT Indorama Synthetics, a publicly listed
polyester producer, which exported 70 percent of its output last
year, foresees a slight decline in overseas sales but a
significant increase in domestic sales this year.
Indorama corporate secretary V.S. Baldwa said on Wednesday
that an expected recovery of the country's major textile
producers would boost the company's domestic sales, which had
been severely affected by low demand over the past two years.
Indorama exported 50 percent of its output in 1996, 58 percent
in 1997 and 70 percent in 1998, he said.
"But our exports may decline slightly to about 66 percent of
our total output this year," Baldwa said after the company's
annual shareholders meeting.
Indorama's main export markets are Europe, the United States
and Australia, which together take up 82 percent of total
exports, he added.
He said Indorama expected to book the same level of revenue
this year as it did last year.
"The difference between 1999 and 1998 is that this year we are
expecting a significant increase in domestic sales," he noted.
Indorama's net sales dropped to US$280.63 million last year
from $337.09 million in 1997 and net income plunged to a mere
$267,646 from $6.96 million in 1997.
The fall in net income in 1998 was attributed to the
volatility of the exchange rate and interest rates, combined with
an economy of scales caused by lower production volume.
"But Indorama met all debt servicing obligations on time
despite the tough year," he pointed out.
The company produces, at its industrial complex in Purwakarta,
West Java, polyester filament yarn, spun yarn, PET resin,
polyester staple fibers and finished fabrics.
Net sales during the first quarter of this year fell to $57.68
million from $72.89 million in the same period last year while
net income declined to $150,000 from $1.24 million.
"We are, however, optimistic that our sales would increase
markedly in the second half of this year," Baldwa added.
He quoted Indorama managing director S.P. Lohia as telling the
shareholders meeting " Indorama has stood firm and produced
satisfactory results during the very difficult year. We are now
geared up to capitalize on the opportunities that can be seen on
the horizon."
Indorama, Baldwa said, completed construction on its new
sewing-thread yarn plant in the first quarter of this year.
The new facility, which was partly financed by a foreign
creditor, is now operating at full capacity, he said.
"We received $18 million in long-term funding in 1998 for the
plant from DEG Germany," he added.
This foreign loan, in addition to the decision by the
International Finance Corporation, a World Bank affiliate, to
more than double its shareholding in Indorama to 7.3 percent,
reflects international institutional confidence in Indorama
management, he added.
He said the company had no difficulties collecting receivables
from its domestic customers because most of them were export-
oriented companies.
"Since late-1997, we have collected all our receivables,
including those from domestic customers, in United States
dollars," Baldwa said.
Indorama's shareholders approved the management's proposal to
forego dividend payments for 1998.(udi)