Semen Gresik growth to slow

The growth of pretax profit of PT Semen Gresik would have slowed down in 2004 due to the high base of net profit of 2003.  The Finance Director of Semen Gresik, Cholil Hasan, said that the pretax profit of Semen Gresik in 2002 was IDR151 billion, and it grew to IDR378 billion in 2003. He predicted that the pretax profit of the cement company would have reach IDR500 billion.  "In such condition it would be very good if our profit could grow by 10 per cent this year, as the price of oil has increased by 30 per cent," he told Bisnis Indonesia over the weekend.  He hoped that the oil price increase would not slow down the demand of cement. 

With the assumption that the company would not increase its production capacity over its current 17.25Mta, the demand on cement would exceed the supply of the company.  The demand for cement from Gresik could increase to 16.66Mt in 2005, 17.99Mt in 2006, 19.43Mt in 2007, 20.98Mt in 2008 and 24.03Mt in 2020.  If the company did not increase its production capacity, the market share of Semen Gresik would decrease to 44 per cent in 2007 from 45 per cent in 2006, and to 41 per cent, 38 per cent and 36 per cent in 2008, 2009 and 2010 respectively. 

"The production capacity of Semen Gresik has been optimum. It is impossible for us to increase our profit unless we increase the production capacity," said Cholil.  But to develop new cement plant the management needed the approval from shareholders.  It was difficult, however, to discuss about any business plan of the company as the government of Indonesia and Cemex Asia, two largest shareholders of the company, were now in dispute on ownership of the cement company.  Cholil said that the government and Cemex should settle the dispute first so that they would be able to talk about the future business of the company.