Indonesia’s second-largest cement maker, PT Indocement Tunggal Prakarsa Tbk , posted a 10.1 per cent increase in first-quarter net profit, thanks to strong cement sales and foreign exchange gains. However, higher costs pushed Indocement’s income from operations down by 0.42 per cent to 270.4 billion rupiah (US$30.87m) and cut operating margins to 18.9 per cent from 22.6 per cent, the company said in a statement late on Monday. Operating expenses have been soaring for many businesses in the country since the government more than doubled fuel prices last October in an effort to reduce pressure on the budget from high world crude prices.
Indocement, controlled by Germany’s HeidelbergCement Group , booked a net profit of 164.48 billion rupiah in January-March, versus 149.39 billion rupiah a year earlier. Its net profit margin slipped to 11.5 per cent from 12.4 per cent, while revenue climbed nearly 19 per cent to 1.43 trillion rupiah.
Indonesia consumed 31.5Mt of cement last year, up 4.9 per cent from 2004. The growth in national consumption was lower than analysts’ expectations for 7-8 per cent.
On Friday, the country’s top cement firm, PT Semen Gresik Tbk , said its 2005 net profit doubled, boosted by improved margins and strong sales growth, but it predicted 2006 growth could slow to 25 percent as high interest rates may deter house buyers and building projects. Based on Monday’s close, Indocement is valued at 20.7 times its forecast 2006 earnings, dearer than Gresik’s 14.7 times. ($1=8,760 rupiah)