Semen Gresik to expand using internal cash

Semen Gresik to expand using internal cash
Published: 28 September 2007

PT Semen Gresik Tbk will use internal cash reserve to expand the facilities next year with the investment of US$250m - US$300m.  
Semen Gresik’s Vice President Director Rudiantara said the total investment for cement facility and power plant will reach US$1.3bn - US$1.5bn. The company will need only 25% for next year.  
"We have not decided how to get the US$250m - US$300m loan and we have not surrendered yet," he told the press yesterday.  
He said the company owns internal cash of US$200 million and it is enough to meet the need of expansion financing. On the other hand, the company may get loans of up to US$1.2 billion.  
Semen Gresik’s Finance Director Cholil Hasan said the debt to EBITDA (earnings before interest, tax, depreciation, and amortization) ratio of cement industry is two times, while the company’s ability to repay is four times.  
The Present EBITDA is US$300 million so that the company can get US$600 million - US$1.2 billion loan," he said. 
Semen Gresik’s President Director Dwi Sutjipto said the company has planned to produce five million tons of cement in 2011, 1.5 million of which will use bottlenecking system by boosting the production without additional investment.  
"The production capacity should increase to 18.5 million tons next year compared with 16.9 million tons in 2006 so that it will increase to 22.5 million tons in 2011," he said.  
The company has posted the first half net profit of IDR700 billion, an increase of 9.4% from IDR639 billion on the same period of last year.  
The first half sales revenue has increased to IDR4.4 trillion from IDR4.08 trillion.  Semen Gresik contributed 47.7% to the revenue,  Semen Padang contributed 17.8% and  Semen Tonasa contributed the rest.  
"We have launched efficiency measure so far. The performance has increased on the growth of outside Java’s market," he said.  
As of the first half of the year, cement consumption has increased by 7.2% from 14.6 million tons to 15.6 million tons. The growth outside Java has been 12%-16%, and in Kalimantan has been 22.3%. 
Semen Gresik Group, Dwi said, controls 45.6% market share and the figure will remain the same until the end of the year. 
"I am optimistic to meet the growth target of 8% this year as we have some facilities scattered in some areas of Indonesia," he said.  
The other revenue booster, he said, is the price increase to IDR560,000 per tons from IDR545,000 in 2006.  
When asked about the establishment of cement holding company he said the company’s EGMS will not discuss it soon as the company has been focusing on the establishment of new facility and internal restructuring.  
"We will follow Bapepam-LK’s regulation. If it is material transaction, we will discuss it in EGMS. We will apply transparency principle," he said.