Holcim Indonesia to expand exports as domestic competition tightens

Holcim Indonesia to expand exports as domestic competition tightens
Published: 30 May 2016

LafargeHolcim subsidiary, PT Holcim Indonesia, plans to boost exports to Australia, Sri Lanka and Bangladesh this year amid unstable domestic demand, reports The Jakarta Post.

After the acquisition of Lafarge Cement Indonesia, also known as Semen Andalas, in February and the commencement of operations at Tuban II plant in East Java last August, Holcim's production capacity has risen to 15Mta from 11Mta at the beginning of 2015.

"To address this we need to export more while of course also still ensuring a better presence in Indonesia, especially in Sumatra," said Holcim chief financial officer Mark Schmidt, without mentioning any export sales target this year.

Holcim claims to have now secured a 17 to 18 percent market share in Indonesia from around 15 percent before the acquisition of Lafarge Cement.

Lafarge Cement has a strong presence in the northern part of Sumatra, with a plant in Lhoknga in Aceh, while Holcim has a firm foothold in Java and the southern part of Sumatra.

Holcim thinks that higher market share is important for cement makers in the country that have seen tighter competition in recent years, with the number of cement industry players doubling from nine in 2012 to 19 at present.

Revenues have come under additional pressure following the government’s intervention to cap cement prices in an effort to stimulate construction activity.

In January last year, President Joko "Jokowi" Widodo instructed state cement makers, including the biggest producer Semen Indonesia, to bring down their selling prices by IDR3000 (US$0.22) per bag.