Semen Gresik foresees 10% boost in sales

JAKARTA (JP): Publicly listed cement producer PT Semen Gresik said on Wednesday that a growing cement consumption in the local market was expected to boost the company's sales this year by 10 percent from 13.73 million metric tons in the previous year.

Semen Gresik president Urip Timuryono quoted the Indonesian cement association as predicting local consumption to hit 25 million tons this year from 22.38 million tons last year.

He said that as demand grows, he hoped the company could maintain its market share of 45 percent.

According to him, a prospering retail property sector has been fueling demand for cement over the past years.

"These are people who buy cement for their houses in Sentul," he said, citing a real estate area in Bogor, West Java.

Of the 13.73 million tons in total sales last year, the company sold 9.92 million tons in the local market. This marks a slight increase from 8.45 million tons in local sales in the previous year.

Semen Gresik's 2000 annual report attributed the growth to a 18.7 percent surge in cement consumption during that year, when demand hit 22.38 million tons.

Despite last year's hefty surge in demand, oversupply still looms over the market, given the country's cement output capacity of 46.23 million tons.

But last year, the company operated at 82.8 percent of its production capacity, as against only 75.1 percent in 1999, Urip went on.

While he expects local sales to grow, he plans to cut export sales due to persistent weak cement prices in the world market

"We are targeting to reduce export sales and increase domestic sales," Urip said.

Analysts said the cement industry prospered best when serving the nearest market, since the farther cement producers sell their cement, the costlier the price is.

Commenting on the recent hike in fuel prices and another planned increase in electricity rates, Urip said that energy makes up 30 percent of Semen Gresik's total costs.

Nonetheless, he said his company had no plans yet to raise its cement prices in response to the higher fuel prices.

In April, the government imposed fuel prices on industries at 50 percent of international market prices. Consequently, fuel prices jumped by an average of 100 percent.

Next month, the government will raise electricity rates by an average of 17.47 percent, the second hike since last year's average increase of 29 percent. But the rise will not affect fuel sold to industrial users.

For the year 2000, Semen Gresik booked a net profit of Rp 342.76 billion (about US$30.2 million) up from Rp 240.59 billion in 1999.

The company is 51.01 percent owned by the government, 25.53 percent by the Mexican based cement company PT Cemex Indonesia, and 23.46 percent by the investing public.

Semen Gresik consists of PT Semen Padang, and PT Semen Tonasa, which merged to become the Semen Gresik Group in the mid 90s. (bkm)