Cement and clinker sales by Indocement, the second largest cement producer in Indonesia behind Gresik, declined by 3.9 per cent last year to 11.02Mt. Although the Indonesian cement market improved by around one per cent last year, Indocement’s domestic deliveries fell by 7.2 per cent to 8.4Mt as the company took a more aggressive stance on pushing up prices than some of its competitors. Export volumes, on the other hand, moved ahead with the majority of exports going to the HeidelbergCement group, principally its operations in Bangladesh and Brunei. The turnover declined by 4.7 per cent to €427m, but in local currency there was an increase of slightly more than five per cent. Operating margins, however, declined from 36 per cent to 31 per cent, leading to a reduction in the operating profit at the EBITDA level of 17.8 per cent to €131m though when measured in local currency the decline is limited to some eight per cent.
To some extent helped by currency effects, Indocement’s net debt had fallen to €433m at the end of 2003, compared with €667m a year earlier. HeidelbergCement, which has effectively been controlling the company for a number of years and has masterminded the debt reduction programme, will be consolidating Indocement from this year on the back of its 51 per cent stake in the joint holding company formed with a German bank. Following the sale by the Indonesian government of a 3.9 per cent stake, the present beneficial ownership is 33.2 per cent HeidelbergCement, 31.9 per cent WestLB and a 34.9 per cent free float, but over time HeidelbergCement will be required to purchase the WestLB stake.