The chief of PT Holcim Indonesia Tbk , the country’s third largest cement maker, said on Friday the firm’s 2006 sales could be up to 14 per cent lower than last year due to a slowdown in the construction sector.
However, Tim Mackay, CEO and president director of Holcim Indonesia, a unit of Holcim Ltd, said overall industry sales were likely to be only 0.5-1.0 per cent lower than last year, depending on the pace of recovery in the second half of this year.
Mackay told Reuters in an interview overall industry sales volumes were down 5.6 percent year-on-year in the first half of 2006 and he would be happy if the industry ended up with zero percent growth this year.
"If we achieve zero cement industry growth overall in 2006, I would be pleased. Of course, I would like more, but if we have zero growth this year it would be OK in the circumstances. I think next year’s growth in the industry would be pretty small."
Indonesia’s cement consumption has been falling with the economy slowing due to weak purchasing power and high interest rates after a government decision to sharply raise fuel prices last October.
Indonesia consumed 31.5Mt of cement last year, but this year’s sales are seen down because several infrastructure projects yet to take off.
Holcim’s cement and clinker sales last year stood at 6.6Mt.
"2006 is the year of correction ... It will establish a more realistically sustainable path of the future," Mackay said when asked about the prospects of Southeast Asia’s largest economy.
Holcim controls about 13 percent of the Indonesian cement market, down from 15 perc ent by the end of 2005, with players in the industry engaged in a fierce price war. But the company is aiming to have a 17 per cent share by the end of 2007.
Mackay said prices had declined by about 25 per cent since the price wars started and the industry had lost millions of dollars.
"I would be surprised if it went for another six weeks," Mackay said, responding to a question on how long he expected the price war to go on.