Semen Gresik almost doubles net profit

Semen Gresik almost doubles net profit
Published: 28 October 2005

Higher sales and production have helped Indonesia’s largest cement producer, PT Semen Gresik (SG), to a 91 per cent increase within the first nine months of the year in its unaudited financial, reports the Jakarta Post. The state-owned company said its net profit in this year’s first three quarters increased to Rp 706 billion (US$70.74m) from Rp 369 billion in the corresponding period last year.   "We have far surpassed our full-year target of Rp 600 billion," said SG president director Dwi Sutjipto, adding that the company would increase its 2005 full year production from 15.5Mt to some 16Mt.   Dwi said the company’s plants had been upgraded and were at full capacity so they could fulfill SG’s ambition to reach its total production capacity.  

As of September 2005, the cement maker had produced 12.23Mt, of which 10.83Mt went to domestic consumption and 1.46Mt were exported.   Gresik domestic cement consumption increased by 8 per cent due to high demand from infrastructure projects in Banten and West Java, as well as robust growth in the property sector. However, exports of the company fell by 9.2 per cent.  

Elsewhere, the country’s second largest cement maker Indocement, controlled by Germany’s giant HeidelbergCement AG, had a net income of Rp 538.3 billion in the first nine months of the year, compared with Rp 183 billion in the same period last year. The company said sales rose 23 per cent while currency losses narrowed by 71 per cent.  

Combined, the two cement producers control approximately 70 per cent of the domestic market share, which saw sales rise by 7.8 per cent in the first nine months of the year.  

At present, the industry’s installed national capacity stands at 45Mta, with cement expected to reach some 33Mt this year, up from 30.5Mt last year.  

The production of Gresik -- which has subsidiaries of PT Semen Padang in West Sumatra and PT Semen Tonasa in South Sulawesi, now accounts for some 44 per cent of the country’s cement supply.  

Dwi projected that national demand would grow by 8.5 percent next year, or some 35 million tons.  "If we want to maintain our market share, we have to increase our production by 9 per cent next year," he added.   The company is expecting to produce 17.4Mt of cement next year, of which 16Mt would be allocated for domestic consumption. "The current robust growth is the result of a good synergy in increasing efficiency in both production process and distribution," Dwi said.  

SG also reported that it had increased its prices by 6sixper cent as of the beginning of this month as a result of higher fuel prices.   "The fuel price hike has raised our operational costs by 12.5 per cent. But, due to a better and more optimum utilization (of the plants) and distribution we can keep the prices from soaring," he said.  

The company still reports long-term debt of Rp 732 billion and bond payments of Rp 432 billion due in June next year.  Meanwhile, its subsidiaries Semen Tonasa and Semen Padang still have to pay their two-step loans to the government in the amount of Rp 190 billion and Rp 300 billion, respectively.