PT Indocement - April 2019

Following less than five per cent growth in cement consumption in Indonesia last year and a slow start to 2019, all eyes are now on the second half of this year to boost cement demand. With the presidential elections out of the way, the country’s cement producers are hoping for an increase in demand on the back of government investment in infrastructure and housing. But oversupply and rising production costs remain a challenge.

For Heidelberg-owned Indocement, overcapacity in the market of around 40Mta and intense competition from new players prompted the company to reduce its energy bill through the use of alternative fuels, as well as improving logistics and distribution via its new terminals in Palembang and Lampung. 

Despite this, the company is forecasting conservative sales growth of just four per cent for 2019, compared to the 5.7 per cent advance it reported last year. Consolidation is also expected to become key as competition continues to grow. “Every year we look for acquisition opportunities. If the [plant’s] location is good and it could give value added to us, we will consider it,” Christian Kartawijaya, president director of Indocement, told The Jakarta Post.