Indonesia’s Indocement Q1 net profit down

Indonesian cement maker PT Indocement Tunggal Prakarsa Tbk’s first-quarter net profit fell 32 per cent from the previous

year because of higher costs and operating expenses. A statement on the company’s Web site ( www.indocement.co.id ) showed the firm, controlled by Germany’s Heidelberg Cement , posted a net profit of 112.5bn rupiah ($12.39 million), down from 164.5bn in the year-ago period.

Its sales climbed 3.5 per cent to 1.48 per cent while operating income dropped 21.2 per cent to 213.2bn rupiah. Indocement’s operating margin declined to 14.4 per cent from nearly 19 per cent a year ago with net profit margins falling to 7.6 per cent at the end of March from 11.5 per cent.

Despite its lacklustre first quarter numbers, Rachman Koeswanto, a research analyst at Deutsche Bank noted: "We remain upbeat on the company’s outlook given the improvement in the competitive environment and robust cement demand outlook," Koeswanto, who has a target price for Indocement’s shares of 6,700 rupiah, said in a research note.

"We expect better earnings outlook in the second and third quarter this year, supported by robust cement demand and greater pricing flexibility."

Indocement, Indonesia’s second largest cement maker with a market capitalisation of US$2.3bn, did not provide details on its cement sales volume.

Analysts expect Indocement to post a net profit of 968bn rupiah in 2007, up 63 per cent from last year.

Indonesia’s domestic cement consumption grew 10.2 per cent to 7.68Mt, as the construction and housing sectors picked up on the back of

declining interest rates.

The pace of Indonesian cement consumption slowed down in February when it rose by only 3.5 per cent YoY due to widespread flooding in Jakarta and other parts of the country.

Some analysts and industry experts expect cement sales to rise more than five per cent this year, picking up from 1.8 per cent growth last year, if the government speeds up infrastructure projects.

Cement sales in the world’s fourth most populous nation totalled 32.1Mt in 2006.