Semen Cibinong profits drop 56 percent

Rendi A. Witular, The Jakarta Post, Jakarta

Publicly-listed cement maker PT Semen Cibinong said in its 2002 audited financial report that net income dropped by 56 percent to Rp 502 billion (US$56.40 million) from Rp 1.16 trillion in 2001.

The company said losses from operations increased to Rp 211 billion from Rp 157 billion.

"This was due to costs increasing faster than prices, increased depreciation following an asset revaluation, the write- off of certain inventories which no longer have any economic value and project costs associated with performance improvements," company president Tom Clough said on Monday.

He said that although cement prices increased by around 17 percent last year, this was not enough to compensate for the 19 percent average increase in production costs.

Clough said that technical and distribution problems in the middle of last year compounded the already slow growth in market demand.

Semen Cibinong sales revenue increased by 10 percent last year to Rp 1.9 trillion.

Clough said that last year's net income was due almost entirely to foreign exchange gains.

During 2002, the company exported 2.38 million tons of cement and clinker, an increase of 6 percent compared to 2.25 million tons in 2001. But due to the appreciation of the rupiah against the U.S. dollar, export revenues dropped by 8 percent to Rp 399 billion from last year's Rp 434 billion.

Asked about sales prospects this year, Clough predicted they would remain weak due to flat demand amid uncertainties in the overall economy resulting from the impact of the war in Iraq, the outbreak of SARS, and the upcoming 2004 general election.

In 2002, the total domestic market demand for cement was 27.2 million tons. Semen Cibinong has a market share of around 15 percent.