Jardine Cycle increases stake in Astra International to majority

Jardine Cycle increases stake in Astra International to majority

Bloomberg, Jakarta

Jardine Cycle & Carriage Ltd., which sells Mercedes-Benz cars in Singapore, has increased its stake in Indonesia's PT Astra International to a majority.

Jardine Cycle paid Rp 72.6 billion (US$7.4 million) to buy an additional 5.485 million shares of Astra International, Indonesia's biggest automobile distributor, from the market at Rp 13,244 each.

The purchase increased its stake to 50.09 percent from 49.95 percent, Singapore-based Jardine Cycle said in a statement to the stock exchange on Tuesday.

"Astra is now a subsidiary," Jardine Cycle said.

Jardine Cycle on May 10 reported a 33 percent increase in profit, boosted by earnings from its Indonesian ventures.

Astra accounts for 46 percent of the almost 300,000 cars sold in Indonesia in the first half of this year.

"Strong consumer demand for motorcars and motorcycles, the increased supply of heavy equipment for mining and improved earnings from financial services led to strong growth in Astra's profit," Jardine Cycle said then.

Astra's net income rose to Rp 1.52 trillion ($155 million) in the three months ended June 30 from Rp 1.37 trillion a year earlier.

Sales rose 39 percent to Rp 15.3 trillion.

Jardine Cycle also owns 47.5 percent of Jakarta-based PT Tunas Ridean, which has automobile dealerships for new and used motor vehicles and spare parts.

Domestic auto sales may rise 14 percent to 550,000 units this year, slowing from a 36 percent increase last year, Gaikindo, the Indonesian association of automotive industries, said earlier this year.

Astra International lost market share in the first half as Indonesians bought cars made by other manufacturers such as Suzuki MotorCo., which the company does not represent.

Rising interest rates and plans by the government to increase taxes on large cars may slow revenue and earnings growth this year, analysts have said.

Indonesia is planning regulations to reduce fuel consumption to lower fuel subsidies that are rising because of higher oil prices.