Semen Gresik to export 1.25m tons of cement

JAKARTA (JP): Publicly listed cementmaker PT Semen Gresik and its two wholly owned subsidiaries will export at least 1.25 million metric tons of cement this year to offset a declining domestic demand, the company's president has said.

Company president Urip Timuryono said here on Wednesday that Semen Gresik would export 200,000 tons, while its subsidiaries, the West Sumatra-based PT Semen Padang and the South Sulawesi- based PT Semen Tonasa, were expected to export 601,000 tons and 450,000 tons, respectively.

"We have to boost our exports because the country's economic slump has nearly halted almost all local construction and property development," he told the media on the sidelines of a hearing with the House Commission V for industry, mining, trade, manpower, cooperatives and the environment.

He said the three cementmakers, known as Semen Gresik Group, have already exported 800,000 tons during the January-September period.

At the hearing, chaired by Sjamsoedin of the Armed Forces faction, Urip said unlike its two subsidiaries, Semen Gresik sold all its cement production on the domestic market last year.

Semen Padang exported about 377,000 tons of cement in 1997 and Semen Tonasa 550,000 tons in the same period.

The Semen Gresik Group exports its products mostly to Latin American countries, including Chile and Costa Rica, and South Asian countries, including Bangladesh.

He said the group expected to produce 17.75 million tons of cement this year, with Semen Gresik accounting for about 8.7 million tons, Semen Tonasa 3.48 million tons and Semen Padang 5.57 million tons.

Semen Gresik, which is 65 percent owned by the government and 35 percent by the public, took over the ownership of PT Semen Padang and PT Semen Tonasa three years ago as part of the government's restructuring program on state-owned companies.

Urip said that domestic cement demand had dropped sharply due to closures of the country's large construction and property projects.

The company's earning this year would be consequently lower than those recorded in the previous year, he said.

"There is no single company which can make a profit amid this worst-hitting crisis," he said.

The company recorded a consolidated net profit of Rp 232.55 billion in the first semester of this year and net sales of Rp 961.82 billion in the same period.

He said that the company had a total debt of Rp 5.67 trillion as of June this year, comprising Rp 2.5 trillion in dollar- denominated debts and the remainder in rupiah.

"But our debts are of a long term, which will mature in eight years," he said.

Semen Gresik holds a total market share of 47 percent in the country's cement market, with the remaining held by Salim Group's Indocement and Semen Cibinong Group controlled by Hashim Djojohadikusumo.

Cemex wants 25%

The government agreed late last month to sell part of its shares, about 14 percent of the total shares of Semen Gresik to Mexican Cemex SA for US$1.38 a share.

The agreement also allowed the Mexican cement firm to buy a further 6 percent through a tender offer mechanism in the local market.

But Cemex planned to control at least 25 percent of Semen Gresik, to enable it have a controlling stake in the country's largest cementmaker.

"Cemex has disclosed that it wants to buy a 25 percent stake so they can have two representatives on the board of directors and two on the board of commissioners," Urip said.

He said that if approved by the government, the world's third largest cement company should be able to buy additional five percent shares from the public in the future.

"They can purchase additional five percent sometime in the future," he said without spelling out how the government would view the intended increase.

Urip said Semen Gresik did not have any problem with the entry of Cemex because its presence would benefit the company in the long term, especially in expanding the company's international marketing networks.