PT Indocement - August 2015

PT Indocement intends to suspend production of lines P1, P2 and P6 at its Citeureup works in Indonesia. The move is being seen as a cost cutting exercise following an 8.1 per cent fall in domestic sales volumes in the first half of this year. This compares to a 4.2 per cent contraction in domestic cement consumption across the country.

While the general slowdown has been blamed on the ongoing economic situation and delays to government infrastructure projects, Indocement’s disappointing results are reportedly due to its margin-oriented price policy, with its 1H15 prices coming in higher than those in the previous year on average. The company has also reportedly slashed its capex for 2015 by 30 per cent from IDR5trn (US$371.06m) to IDR3.5trn.