Kimia Farma asks for a delay in divestment program

The Jakarta Post, Jakarta

The management of state-owned pharmaceutical company PT Kimia Farma said the sale of the government's shareholding in the company should be delayed for another one to two years.

Company finance director M. Syamsul Arifin said that the delay was needed to further improve the company's financial condition so that the value of the shares would be higher.

"As a company included in the list of the government's divestment program we are ready. But, if we may suggest, the divestment should be made in another one or two years, when the company's condition has strengthened," he was quoted by detik.com as saying over the weekend.

Kimia Farma is one of a number of state-owned enterprises due to be sold by the government this year in a bid to raise around Rp 5 trillion in cash to help finance the 2004 state budget deficit.

The government has a 90 percent stake in Kimia Farma, while the remaining 10 percent is in the hands of public investors.

Asked about progress on the planned merger, Syamsul said that it was still being reviewed by a government team, adding that there was a possibility the company might be merged with another state-owned firm, PT Indofarma.

He explained that mergers or acquisitions are currently being entered into by pharmaceutical companies worldwide in a bid to cut marketing and research costs.

Kimia Farma reported a 30 percent increase in 2003 net profit to Rp 46.2 billion (US$5.47 million), from Rp 35.4 billion in 2002.

The increase came from an 18.07 percent rise in sales to Rp 1.816 trillion last year, from Rp 1.538 trillion accumulated in 2002.

This year, Kimia Farma projected net profit to double to Rp 93.46 trillion on an expected 5.2 percent increase in sales to around Rp 1.91 trillion.