Modern Photo to set up a joint venture

JAKARTA (JP): The publicly listed PT Modernphoto through its subsidiary PT Honoris Industry plans to set up a joint venture firm with two Japanese firms, Mitsui & Co., Ltd of Japan and PT Mitsui Export Indonesia to produce electronic entertainment products.

Finance Director Achmad F. Hasan said here yesterday the joint venture, PT Honoris Mitsui Electronic would have a paid-up capital of about US$70 million.

He said Modernphoto, a member of the widely diversified Modern Group, would have a 70 percent stake and the two partners would own the remaining 30 percent.

"The joint venture is still subject to government approval," he said.

The government's go ahead was expected in August this year, he said.

The Modern group's vice president Michael Haribowo said the new venture would handle all Honoris Industry's production activities.

Honoris Industry at present produces car stereos under license from its principal in Japan.

"One of the products is a car stereo with the Pioneer brandname," he said.

With the joint venture licenses to produce the car stereos would not be needed from the principle, Hasan said.

He said all the products would be exported.

"Hopefully the joint venture will contribute 20 percent to Modernphoto's sales this year," he said after the company's shareholders meeting.

Hasan said Modernphoto recorded total net sales of Rp 666.2 billion (US$277.5 million) in 1996, up 3.7 percent from 1995's net sales of Rp 642.3 billion.

"Such a small sales growth was caused by a drop in the value of camera exports in rupiah," he said.

He said the company's net profit rose to Rp 63.5 billion, up 2 percent from 1995's profit of Rp 62 billion.

But net profit this year was expected to increase by 16 percent to about Rp 74 billion, he said.

"The projection was revised from an initial estimate of 71 billion. Net sales were projected to grow by about 18 percent in 1997," he said.

During the first quarter this year, the company booked net sales of Rp 177 billion, up from Rp 152 billion in the same period last year, he said.

The net profit in the January to March period was Rp 16.8 billion, up from Rp 14.6 billion in the same time last year.

He said shareholders at the meeting endorsed the management's proposal to cut the company's share par value from Rp 1000 to Rp 500.

The cut would double the number of shares and halve their price, he said.

"The split is to increase the liquidity of the shares in the market," he said. The number of shares would double to 266,769,900.

The property arm of the Modern Group, PT Modernland recorded a net profit of Rp 14.16 billion in 1996, down from Rp 23.04 billion in 1995.

Jusuf Halim, the property company's director said Rp 3.5 billion of the 1996 profit would be used to pay dividends, the other 2.5 billion as reserve funds and the remaining 8.12 billion to increase the firm's working capital. (09)