Strong rupiah may hurt exports: Intikeramik

JAKARTA (JP): Publicly listed porcelain tile manufacturer PT Intikeramik Alamasri Industri said on Friday the strengthening of the rupiah could hurt its exports.

Company president Lie Ju Tjhong said that if the rupiah further surged to below Rp 6,000 against the U.S. dollar, the target to double its exports this year would be difficult to achieve.

"We have had very high export orders since the beginning of this year. But if the rupiah strengthens to less than 6,000 per dollar, our exports will be hurt," Lie said.

Lie said that currently 60 percent of the company's tile production is exported, compared to 45 percent in 1998 and 12 percent in 1997.

"The low rupiah value gives added competitiveness to Indonesian products sold overseas," Lie said after the company's annual shareholders meeting.

Intikeramik -- the owner of the "Esenza" brand -- previously sold most of its products at home, but beginning this year put emphasis on overseas markets due to low domestic demand.

Intikeramik's export sales volume increased to 724,000 square meters of porcelain tiles in 1998, from 454,000 square meters the previous year, according to Lie.

"Currently Intikeramik is overwhelmed with abundant export orders, so our working capital can not keep up," another executive said.

He said the company's production capacity would soon be increased by doubling production lines to six units to meet the growing overseas demand.

"Our exports now go to more than 30 countries as compared to half that in 1998," he added.

He also said that the company had a sizable stockpile sitting in its warehouse that had not passed quality inspection in 1993.

"We have just started to sell this ready stock as second quality product to Vietnam, Cambodia and Lebanon. This should help finance our increased working capital," he said.

Intikeramik booked a Rp 452.5 billion (about US$67.5 million) net loss in 1998, compared to a net loss of Rp 29.8 billion the previous year.

The huge jump in losses in 1998 was attributed to a Rp 240 billion foreign exchange loss from U.S. dollar debt exposure and burdensome interest expenses that reached Rp 210 billion for the year.

The shareholders agreed to the company's proposal in the meeting to forgo dividend for the 1998 financial year. (udi)