Krakatau Steel's profits rise
Krakatau Steel's profits rise
JAKARTA (JP): State-owned PT Krakatau Steel, the country's largest producer of steel products, based in the West Java town of Cilegon, saw its profits up sharply to Rp 240 billion (US$105.26 million) after several years of small earnings.
"We're very grateful that we managed to earn four times our profit target of Rp 60 billion last year. And this is very surprising in view of the liberalization of steel imports," the company's president, Soetoro Mangoensoewargo, told reporters in Cilegon on Wednesday.
He said that the company's total sales last year amounted to Rp 2.2 trillion, of which 60 percent were derived from domestic sales and 40 percent from exports.
He attributed the profit jump also to a strong demand for steel products and the success of the company's restructuring.
The steel company used to monopolize the steel industry, but the government ended the exclusive contract in 1993, thereby subjecting the industry to open competition.
In 1992, before the revocation of the monopoly, the company managed to achieve a profit of about Rp 300 billion. But in 1994, after the revocation, its profit dropped to Rp 58 billion.
This year, the company expects to gain total sales of Rp 2.4 trillion and a larger amount of profit.
Corporate Secretary Armand A. Mahadi said that the company is scheduled to go public in October with a target of raising between $500 million and $600 million in fresh funds.
"But we're still making preparations for the initial public offering," he said, adding that the government has approved the listing plan.
He did not explain whether the company will be listed on both domestic and foreign markets as has been done by PT Indosat and PT Telkom.
According to Armand, Krakatau Steel, in cooperation with Pohang Steel of South Korea, Nusamba Group and PT Corindo, plans to start the third expansion stage of its plant with an investment of $500 million.
"After the expansion that is expected to be completed in 1999, our total production capacity will increase by one million tons to 3.5 million tons per year," he said. (13)