Indonesia: PT Indocement streamlines operational efficiency

Indonesia's second-largest cement producer, PT Indocement Tungall Prakarsa, has seen its net profit fall decelerate as operational efficiency measures have successfully taken hold

The publicly-listed company’s Board of Directors announced that Indocement booked IDR4.36tn (US$33.3bn) of net profits last year, 17.6 per cent less than the IDR5.29bn in 2014. Its revenues slid by 11 per cent to INR17.8tn.

Indocement finance director, Tju Lie Sukanto, said the drop in revenues was caused by lower sales and cement prices. His firm saw a 7.73 per cent decline in total sales volume to 17.3Mt last year from 18.65Mt in the previous year. “Our cement price also fell by around four per cent on average,” he said.

The company, which is part of HeidelbergCement, was able to reduce its costs of goods sold by 9.2 per cent to IDR9.89tn last year. Indocement has pursued a strategy to supply its products in to areas close to its plants, including Java, South Sumatra, West Nusa Tenggara and Kalimantan and as a result shaved off 2-3 per cent from its unit costs.

Indocement plans to start operations at its brownfield project in Citeureup in April this year. It is expected that this will reduce production costs by around US$5-7/t.

Indocement President Director, Christian Kartawijaya, forecasts domestic cement demand to expand by 3-5 per cent in 2016, based on the government's infrastructure projects.