Matahari's Q2 profit rises 36% on sales of clothes

Matahari's Q2 profit rises 36% on sales of clothes

Bloomberg, Jakarta

PT Matahari Putra Prima, Indonesia's biggest retailer by sales,
posted a 36 percent increase in profit in the second quarter,
helped by sales of clothes and household products generated from
new stores.

Net profit in the three months ended June 30 rose to Rp 28
billion (US$2.9 million) from Rp 20.6 billion a year earlier.
Sales at the Jakarta-based company gained to Rp 1.45 trillion
from Rp 1.22 trillion a year earlier.

Higher consumption in Indonesia, Southeast Asia's biggest
economy, has prompted at least 11 overseas retailers to set up
operations in the country in the past six years.

Indonesia's $258 billion economy is forecast by the government
to expand 6 percent this year, the fastest pace in nine years,
helped by consumer spending, which accounts for two-thirds of the
economy.

"Sales growth was quite good, driven by revenues from its new
stores," said Laksono Widodo, an analyst at Macquarie Securities
in Jakarta.

"Still, Matahari needs to increase its operating profit
margin," said Widodo, who is keeping his "neutral" recommendation
on the stock.

Matahari's operating profit margin, which measures profit from
operations as a percentage of sales, was 2.5 percent in the first
half, compared with 5.5 percent at smaller rival PT Ramayana
Lestari Sentosa.

Profit from selling food, clothes, toys and other household
products, increased to Rp 51.8 billion in the second quarter,
from Rp 43.2 billion a year earlier, according to Bloomberg data.

Matahari, which runs 79 department stores and 45 supermarkets,
last year started expanding into hypermarkets, a combination of
department stores and supermarkets.

It is competing with companies including France's Carrefour
SA, the world's second-largest retailer that runs 15 hypermarkets
in Indonesia, and Dairy Farm International Holdings Ltd., which
in January raised its stake in Jakarta-based retailer PT Hero
Supermarket to 32.7 percent.

Matahari plans to open 10 more hypermarkets on the main island
of Java this year.

The move may help Matahari increase net income by as much as
30 percent this year, accelerating from 8.5 percent growth in
2004, Finance Director Hendra Sidin said on May 20.

First-half sales gained 17 percent to Rp 2.78 trillion.

The company paid income tax of Rp 5.22 billion in the first
half, 44 percent lower than a year earlier.