PT Indocement plans to double export volume

JAKARTA (JP): Publicly listed PT Indocement Tunggal Prakarsa expects to double its export volume in 1999 to approximately 2.8 million tons, from some 1.2 million tons last year.

Indocement director Sudwikatmono said on Wednesday the company's total production would reach eight million tons in 1999.

"We will continue to increase our exports in order to anticipate the prolonged plunge in domestic demand, as well as to improve our financial performance," he said after a shareholders meeting.

Indocement currently sells 30 percent of its total production, but plans to increase the quota to 50 percent, Sudwikatomono said.

The company's total export volume of cement and clinker surged sevenfold in 1998, to reach 1.2 million tons, from 0.17 million tons shipped in 1997.

Sudwikatmono said last year's exports were worth Rp 257 billion and accounted for 16 percent of total sales.

He said the company, however, performed poorly last year, in part because of a significant reduction in domestic sales.

Total domestic cement consumption declined to 19.1 million tons in 1998, from 27.4 million tons in 1997. The sharp decline was due to the prolonged economic crisis, which has reduced consumers' buying power and delayed most construction projects.

Indocement's domestic cement sales fell 34 percent to 6.4 million last year.

Indocement reported a consolidated net loss in 1998 of Rp 1.05 trillion, an increase of 179 percent, from a 1997 net loss of Rp 378 billion.

"The net loss increase was mainly due to our foreign exchange loss last year of Rp 1.08 trillion. Most of Indocement's debts are in foreign currency," said finance director Benny Santoso.

He said the company decided to record all the foreign exchange losses in the current year so that the profitability of future years would not be adversely affected.

He said Indocement was currently undergoing a debt restructuring program to settle its US$933 million offshore loans.

"We are still working on it, and hope that the program can be concluded by the end of this year," he said, adding that the company expected lenders would agree to reschedule the loans.

Indocement declared in July 1998 a "stand still" position for all of its debt service obligations. The move was followed by the establishment of a steering committee by lenders. Chaired by Bank of America NT&SA, members include The Chase Manhattan Bank, N.A., Marubeni Corporation, Bank Nationale de Paris, The Fuji Bank Limited and Bank of Tokyo-Mitsubishi.

KPMG consulting company was appointed by the committee as financial consultant. It recommended the lenders move forward on a debt restructuring program, given the long-term viability of Indocement.

"The debt restructuring program takes quite a long time because we are still negotiating with the creditors. We try to get better terms," Benny said.

To raise funds for debt payments, the company was also considering the sale of its 35 percent stake in its subsidiary coal mining company PT Indominco Mandiri, he said.

Indominco operates in Bontang, East Kalimantan, and has an annual production capacity of 3.5 million tons of coal. It booked Rp 449.3 million in revenue last year.

"We still don't know the exact value of our stake in Indominco, but we will obtain significant funds from it," Benny said.

He said Indocement was considering selling its stake to foreign investors, including French Lafarge Coppee SA and German Heidelberger Zement AG.(cst)