Semen Indonesia - August 2015
A sharp drop in net profit in the first half of this year has prompted Semen Indonesia to review its expansion plans going forward. Net profit over the six months came in at IDR2.2trn (US$163.3m), compared to IDR2.8trn in 1H14, representing a contraction of around 20 per cent. Revenue also fell by 1.9 per cent to IDR12.64trn.
The disappointing results have been blamed on a number of challenges, not least of all a 10 per cent lowering of cement prices at the start of the year in response to government intervention to help support its large-scale infrastructure plans. Electricity costs have also risen by as much as 30 per cent over the period, accounting for 20 per cent of the company’s cost structure. An increase in third-party suppliers’ wages also inflated costs, as did a debt restructuring measure at its Vietnam-based Thang Long Cement Company, which saw Semen Indonesia paying IDR177.65bn in interest and finance charges in 1H15, a rise of 11.3 per cent.
With cement demand remaining sluggish (national sales down 3.3 per cent to 28Mt in 1H15) the company has said that while it will be accelerating the projects that are already underway, it “may adjust the plans” for a number of others. “Our biggest investments are the Rembang plant and the Indarung plant. We’re racing to get that done on time, because if those plans are hampered, we could be seeing a loss,” said a spokesperson for the company.