Indonesia’s state-owned cement companies to increase efficiency

State-owned cement producers in Indonesia have announced that they will continue with efficiency measures to improve their bottom line amid increasing competition and domestic oversupply.

The country’s largest producer, PT Semen Indonesia, will pursue a more efficient production process this year following last year’s fall in profit, said the company’s President Director, Hendi Priyo Santoso.

"We will control what we can control, such as our internal resources, to be more efficient," he said at a session with the House of Representatives Commission VI on Tuesday.

Meanwhile, PT Semen Baturaja, is looking at acquiring a coal mine near its core business centre in South Sumatra to improve its efficiency. Coal currently contributes to around 30 per cent of the company’s cost of goods sold.

"To strengthen our business structure, we will look out for coal mining in South Sumatra in 2018, which can lower our production costs," said Semen Baturaja President Director, Rahmad Pribadi.

With a domestic production capacity of 106Mta, capacity utilisation rates remain subdued in a market where sales reached some 65Mt in 2017, according to The Global Cement Report, 12th Edition.

Semen Indonesia and Semen Baturaja saw net profits decline in the last three years. Semen Indonesia recorded a 50.2 per cent drop to IDR1.46tn in net profit in 3Q17 from IDR2.92tn recorded in the same period of 2016. Semen Baturaja, faced a 43 per cent net profit decline to IDR46.6bn by the end of September last year from the IDR259bn seen in the equivalent period of 2016.