Tembaga Mulia's profits drop 85%

JAKARTA (JP): PT Tembaga Mulia Semanan, a publicly-listed copper rod manufacturer, reported an 85 percent drop in its net profits to Rp 1.1 billion (US$469,684) last year, in spite of a substantial increase in its sales revenues.

The company's total sales increased from Rp 263 billion in 1994 to Rp 359 billion last year but its gross profits declined from Rp 18 billion to Rp 17 billion as the cost of goods rose from Rp 245 billion to Rp 341 billion.

"The market situation of our main products, copper rods and wire, was very unfavorable," Tembaga Mulia's president, Kazu Miyamori, told the company's shareholders.

He said that the price of copper cathodes, Tembaga's main raw material, increased by 27 percent from the average 1994 price.

The market situation worsened last year after the government lowered tariffs on the import of copper products, while the domestic production capacity was 70 percent above the demand, he said.

The domestic demand for cables and wires in the country, according to Miyamori, will continue to grow this year but the competition will also be keener.

"We expect the market volume of our copper rod and wire will also grow. We, however, forecast that our profit margin will fall sharply on competition and downward trends in copper pricing," he added.

Tembaga Mulia, Indonesia's first copper rod manufacturer, was established in 1977. It is now 35 percent owned by the Furukawa Electric Co.Ltd. of Japan, 27 percent by Sucaco, 13 percent by Tomen Corporation of Japan, 18 percent by the investing public and the remaining 5 percent by other parties, including PT Jembo Cable and PT Nikkatsu Electric Co.

Tembaga Mulia's annual report said that it will pay cash dividends of Rp 100 per share for the 1995 financial year, totaling Rp 4.5 billion, despite the significant drop in profits. The dividend payment caused a decline in the company's retained earnings from Rp 24 billion as of the end of 1994 to Rp 21 billion as of the end of last year. (alo)