Indonesia’s second-largest cement maker, PT Indocement Tunggal Prakarsa Tbk , reported on Thursday a 19.9 per cent YoY decline in its 2006 net profit due to higher selling and transportation costs.
The company, controlled by HeidelbergCement AG , booked a net profit of 592.80bn rupiah last year, down from IDR739.69bn rupiah in 2005.
Its revenue climbed 13.1 percent to 6.33 trillion rupiah but a 44.6 percent rise in selling and transportation expenses pushed its operating profit down by 12 per cent to 1.07 trillion rupiah.
However, some analysts are optimistic about the sector, given the low per-capita cement consumption of the country and the likelihood of major infrastructure projects in Southeast Asia’s largest economy.
They expect the company, with a market capitalisation of $2.2bn, to post a net profit of 1.06 trillion rupiah in 2007, with revenue climbing to 7.14 trillion.
Indonesia’s domestic cement consumption grew by 1.8 per cent last year to 32.1Mt higher than many industry experts’ expectations of flat to lower growth.
In early 2006, cement sales were hurt by a government decision late in 2005 to crank up domestic fuel prices, a move that sent inflation to around six-year highs and prompted the central bank to raise interest rates sharply.
Some analysts expect sales to grow around 5 percent this year, helped by lower interest rates and the launch of infrastructure projects.