Cement firms bank on strong domestic focus
Raras Cahyafitri, The Jakarta Post - 07/05/2012
Indonesian cement producers reported double-digit increases in revenues and net profit in the first three months of the year, thanks to growing consumption over various development projects.
According to the Indonesian Cement Association, domestic consumption reached 12.5 million tons in the first quarter of the year, increasing by 18.2 percent from 10.57 million tons the previous year. Total exported cement and clinker reached 129,557 tons in the first quarter of the year, down significantly by 67.6 percent compared to 400,204 tons during the same period last year.
Publicly listed PT Indocement Tunggal Prakarsa reported the highest growth in the first three months of the year compared to two other listed companies. According to figures from the association, Indocement’s total sales volume reached 4.12 million tons during the January-to-March period this year, a 21 percent increase compared to 3.4 million tons in the same period last year. Of the total sales, 4.07 million tons of Indocement’s products were distributed to the domestic market, a 25.5 percent surge from 3.24 million in the same period last year.
The increase in sales volume helped Indocement reap Rp 3.85 trillion (US$419.65 million) in revenue in the first three months of the year, increasing by 30.74 percent from Rp 2.94 trillion in the same period last year.
However, a 22.97 percent increase of cost of revenue to Rp 2.08 trillion slowed the company’s gross profit to Rp 1.77 trillion, or 23 percent lower compared to the same period last year. Increasing non-operating expenses also contributed to the company’s net profits, which stood at Rp 999.86 billion in the first quarter, up 15 percent from Rp 865.3 billion over the same period last year.
Indocement’s market share stood at 32.5 percent in a domestic market consuming 12.5 million tons cement.
“Indocement has a total capacity of producing up to 18.6 million tons of cement from 12 cement plants this year,” Indocement corporate secretary Sahat Panggabean said.
He said that Indocement expected to see an 8 to 10 percent increase in sales volume, in line with an estimated industry increase this year from the company’s output of 15.4 million tons last year. Domestic sales reached 48 million tons in 2011.
Indonesia’s third largest cement producer, PT Holcim Indonesia, saw a 24 percent increase in sales volume to 2.02 million tons during the January-to-March 2012 period from 1.62 million tons over the same period last year. With the large sales volume, Holcim grabbed 16.13 percent of the domestic market share.
Holcim, which is the local unit of Zurich-based Holcim Ltd., also sold about 32,000 tons of cement and clinker to foreign markets. Holcim’s revenue jumped 19.6 percent to Rp 2.01 trillion in the first quarter of the year, compared to Rp 1.68 trilion during the same period last year.
The increase in revenue contributed to the company’s net profit of Rp 249.39 billion in the first quarter of the year, a 19.24 percent surge from Rp 209.04 billion from the same period last year.
Market leader PT Semen Gresik sold 4.94 million tons of cement to the domestic market during the January-to-March quarter this year, increasing by 14.9 percent from 4.3 million tons over the same period last year. The export number reached 20,354 tons.
Semen Gresik, which maintains a domestic market share of 39.5 percent, reaped Rp 4.28 trillion in total revenue during the January-to-March period, a 20 percent increase from Rp 3.55 trillion during the same period last year.
Semen Gresik is expecting further growth as the company expects to see increased production capacity from its two new cement plants, Tuban IV and Tonasa V, which will provide total capacity of around 22 million tons this year.
Adrianus Bias Prasuryo from PT Samuel Sekuritas said that the market might see lower consumption increases in the quarters to come. According to Adrianus, an 18.2 percent increase in domestic market was due to low-based numbers from sales in the first quarter of 2011, which only grew 8.6 percent compared to the previous year.
“We maintain our growth projection [of the cement industry] at 8 percent as we see that the real challenge for growth will begin in the second quarter,” Adrianus said.