Tri Polyta's net income rises 27% to $7.1 million

Tri Polyta's net income rises 27% to $7.1 million

JAKARTA (JP): PT Tri Polyta Indonesia (TPI), a polypropylene resins producer listed on the Nasdaq stock exchange in the United States, reported yesterday that its net income increased by 27 percent to Rp 15.7 billion (US$7.1 million) in the first quarter of this year, as compared with the corresponding period of last year.

"The 27 percent increase in net income is measured according to the American Generally Accepted Accounting Procedure," Sudwikatmono, the company's president, told TPI's general shareholders' meeting at the Grand Hyatt Hotel here.

TPI, however, also reported a decrease in its earnings per American Depository Shares (ADS) to 28 U.S. cents in this year's first quarter from 32 cents in 1994.

The company's vice president, Henry Pribadi, told reporters that the results were attributable to mechanical malfunctioning in its two production trains and to a recent increase in the price of propylene, the raw material for the production of polypropylene.

Polypropylene is used in the production of plastics.

"Our sales in the first quarter of this year, however, were very strong, despite the Moslem holidays, which usually tend to slow business activities down," Henry said.

The company's report states that its revenues in the first quarter of 1995 increased to Rp 152.9 billion from the sale of 54,261 metric tons, up from 1994's first quarter total of Rp 150.2 billion from the sale of 54,7225 metric tons.

TPI, whose plant is located in Cilegon, West Java, has an annual production capacity of 212,000 metric tons.

The company floated its shares on the Nasdaq bourse in July last year, raising $127 million. In March this year TPI secured a $176 million multi-tranche syndicated loan from a group of foreign and domestic banks.

Supply

Yesterday's meeting reported that TPI had reached an "in- principal agreement" with its affiliate, Indonesia's only olefin producer PT Chandra Asri Petrochemical Center, for the procurement of propylene over the next five years.

The agreement, however, is still subject to formal approval by the top executives of the two companies. However, since they are virtually the same parties, this process is expected to be completed by June.

Another matter which will probably become more of a hindrance is the development of tariff structures for both propylene and polypropylene.

At present, government regulations stipulate that propylene is subject to a five percent import duty and polypropylene is subject a 20 percent surcharge on top of a 20 percent import duty.

According to TPI's prospectus, the company is exempted from the duty for the importation of the first 200,000 metric tons of propylene.

While it is not clear how much propylene it has been imported to date, TPI expects that it will be able to extend the exemption until it has finished the construction of its third production train, which is expected to start commercial operations later this year.

In the meantime, the tariff on propylene imports is expected to increase soon, especially after executives of Chandra Asri, whose project is worth $1.7 billion, made a request to the legislature last year for the imposition of a duty of between 35 percent and 40 percent on imports of olefin products -- including propylene -- possibly for the next 10 years.

The request sparked months of intense debate at various levels of government and within the local business community.

Although a decision on Chandra Asri's request has yet to be announced, many analysts expect the olefin producer will have its way because of the group's political clout.

Report

TPI also released its annual report yesterday, which was prepared according to auditing standards used by the Indonesian Institute of Accountants.

The company, which is 29 percent owned by the public, reported that its net profit last year increased to Rp 76.18 billion from Rp 32.52 billion in 1993.

Its total assets, in the meantime, grew to Rp 817.91 billion last year from Rp 624.88 billion in the previous year.

TPI's majority shareholder is PT Bina Kimia Citra, with a 31 percent stake. Bina Kimia is a subsidiary of the Bimantara Citra Group, which is headed by Bambang Trihatmodjo, President Soeharto's second son.

The other shareholders are prominent industrialists in Indonesia, including Prajogo Pangestu (controlling eight percent), Henry Pribadi (seven percent), Ibrahim Risjad (five percent), Sudwikatmono (five percent), Henry Liem (four percent) and Johny Djuhar (two percent). (hdj)