Semen Gresik to give Rp 182.2b in dividends

Rendi A. Witular, The Jakarta Post, Jakarta

Shareholders of PT Semen Gresik, the country's largest cement maker, agreed late on Monday to allocate 35 percent of last year's Rp 521 billion net profit as dividends, or Rp 182.2 billion (US$18.91 million); equal to Rp 307.18 per share.

The company's president director Satrio said on the sidelines of the company's shareholders meeting that the state-owned firm could not provide a bigger dividend for its shareholders.

"Semen Gresik still needs financial support for the company's plans in the near future," he said.

Satrio explained that the state-owned company would need some of the profit to pay bonds worth Rp 447 billion, due to mature in July 2006.

He also said that Semen Gresik had to pay Rp 125 billion in debt to the government, owed by its South Sulawesi-based subsidiary Semen Tonasa.

Semen Gresik would also need $350 million to build a plant in Central Java, Satrio said, but no details were available as to where the plant would be located. Satrio had said earlier that the construction of the new plant would take between three and four years to build before coming onstream.

The firm previously said it would construct the new plant in Sukabumi, West Java, or near Pacitan, East Java, with an installed capacity of between 2.5 million and three million tons per year, after a projected shortfall in cement supply in 2007 due to the high demand from government-driven infrastructure projects.

The company's forecast of a cement shortage in 2007 is earlier than its previous prediction of 2010. The firm did not include in its original forecast the expected increased demand for cement arising out of the major infrastructure projects offered by the government to local and overseas investors at January's Infrastructure Summit.

The government has estimated that investment in infrastructure -- including roads, airports and seaports -- will surpass $150 billion in the next five years, with the bulk of the money coming from the private sector.

Satrio had said earlier this year that cement producers would be able to keep up with the demand for the immediate future as most of the projects were unlikely to start this year or next due to regulatory constraints.

At present, the industry's installed capacity stands at 45 million tons per year, with cement expected to reach some 33 million tons this year, up from 30.5 million tons last year.

Semen Gresik production now accounts for some 44 percent of the country's cement supply. Apart from Semen Tonasa, the company also has subsidiary PT Semen Padang in West Sumatra.

At present, the firm is utilizing all of its installed capacity of some 6.9 million tons. However, with some modification of its plants, the company expects to be able to produce up to 7.5 million tons this year.

Meanwhile, Semen Padang and Semen Tonasa are utilizing between 85 percent and 90 percent of their installed capacities, which stand at 5.24 million and 3.48 million tons respectively.