Semen Gresik publishes 2002 results but dispute rages on

Semen Gresik publishes 2002 results but dispute rages on

Dow Jones, Jakarta

PT Semen Gresik said on Monday its 2002 consolidated net profit fell 16 percent from the previous year to Rp 266.77 billion rupiah (US$32.14 million) - an announcement which could pave the way for local stock market regulators to lift a trading suspension on the company's shares.

But an end to a dispute between the company, which is 51 percent owned by the government, and its wholly owned unit Semen Padang, appears far from over, analysts say.

The dispute, which centers around the government's plans to sell a controlling stake in Semen Gresik to Cemex S.A. of Mexico, was responsible for the late filing of the consolidated 2002 results, and the share trading suspension.

Executives at Semen Padang - which is based on Sumatra island and accounts for 40 percent of Semen Gresik's total annual cement output - say they are opposed to a foreign company taking over.

Earlier this year, executives at the unit declined to hand over financial details for 2002 to Semen Gresik management and officials of the state enterprise ministry in Jakarta.

The Jakarta Stock Exchange suspended trading in Semen Gresik stock May 12 after the company filed the earnings without consolidating the performance of Semen Padang.

Semen Gresik has been able to obtain the results from its unit in the past couple of weeks, and refile its 2002 results, said Agung Wiharto, an investor relations official at the cement company's Jakarta office.

Still, auditors have not yet had time to finish their review of Semen Padang's results.

The stock last traded at Rp 7,900 per share, down 3.1 percent since the start of the year due to the row. The benchmark index climbed about 10 percent in the same period.

The Semen Gresik saga highlights problems that face foreign companies that try to buy Indonesian assets.

Cemex took a 25.5 percent stake in Semen Gresik after the 1997-98 Asian financial crisis and had a deal with the government to increase that stake to 51 percent in 2001 for a further $420 million investment.

That deal never took place as Semen Padang's management orchestrated opposition from workers and local politicians in Padang, the capital of West Sumatra.

The central government, unwilling to exacerbate separatist tensions, has passed laws giving provinces more control over revenues.

In Semen Padang's case, this has led to a drawn-out battle which has left Cemex and the government frustrated.

Refusing to hand over financial details was the latest delaying tactic by Semen Padang's management aimed at blocking the sale to Cemex.

Explaining its results, Semen Gresik said sales in 2002 were up 11 percent compared with the previous year to Rp 5.177 trillion.

But the increase in sales was offset by higher cost of sales, which rose 21 percent to Rp 3.491 trillion. Gross profit fell 6.2 percent to Rp 1.686 trillion. Higher interest expenses, which rose 8.7 percent to Rp 520.78 billion, also helped depress the net earnings figure, the company said.