Tifico estimates loss at Rp 15 billion

JAKARTA (JP): PT Teijin Indonesia Fiber Corporation (PT Tifico) which lost Rp 6.6 billion (US$3 million) in the second half of last year is projected to suffer another loss of Rp 15 billion within the first six months of this year.

Tifico President Director Kikuo Hori said here yesterday that the losses were mostly due to a 35 percent drop in the prices of the company's main product -- fully oriented filament yarn (FOY) -- due to higher prices in raw materials .

He blamed South Korea for dumping its filament yarn on the world market, causing the international prices of polyester products to fall.

The export price of polyester filament yarn from Korea decreased from $2.70 per kilogram in the first quarter of 1993 to $1.45 per kilogram in the fourth quarter of 1993, he said.

Hori said this was the first loss experienced by the company since it started productions in 1976.

Formerly, the before tax profits of Tifico were quite substantial, moving in an upward spiral since the formation of the company. They went from Rp 12.1 billion in the second half of 1991 to Rp 18.8 billion in the first half of 1992, to Rp 20.1 billion in the second half of 1992.

Tifico was listed on the Jakarta stock exchange in 1980.

FOY prices fell from Rp 5,148 per kilogram in the second half of 1992 to Rp 4,501 per kilogram in the first half of 1993 and to Rp 3,741 in the second half of 1993, causing the company to lose Rp 100 million in the first half of 1993 and Rp 6.6 billion in the second half of that year.

Losses

Although Hori admitted that his company would still suffer losses this year, he was convinced that several conditions would enable his company to turn around with a break-even point next year and with a handsome profit of Rp 20 billion in 1996.

He said that the poor cotton harvests in several major producing countries were expected to also increase the prices of polyester staple fiber.

Hori was also convinced that the world demand for partially oriented filament yarn (POY) would increase.

"However, we also face increasing prices of raw materials -- purified terephthalic acid (PTA) -- from $540 per ton in 1993 to $680 in the first quarter of this year and an estimated $710 in the second quarter of this year," Hori said.

He pointed out that the rise in interest rates lately also increased the company's production costs.

Hori explained that the company would cut production costs through increased efficiency, improved production technology and diversification of products into higher value-added textiles.

"These measures are expected to gradually increase the company's income," he said.

Tifico began producing spin-draw yarn (SDY) last November and will start up producing draw textured yarn (DTY) next month and compound textured yarn in October.(10)