Semen Gresik to export 1.25m tons of cement

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.