Displaying items by tag: Indocement Tunggal Prakarsa

Indonesia: The sale of LafargeHolcim's Indonesian unit has sparked the interest of several potential buyers in the region. Names in the ring include Japan's Taiheiyo Cement, Malaysia’s YTL Corp and Indonesia’s PT Semen Indonesia, according to Bloomberg reports that cite unnamed sources. PT Indocement Tunggal Prakarsa is also reported to be interested. Bloomberg reports that LafargeHolcim could seek as much as US$2bn for the unit, which has 15.5Mt/yr of capacity across seven plants.

Indonesia: PT Indocement, the second-largest cement producer in Indonesia, has reported a poor quarterly result amid stiff competition and lower cement prices. Its profit for the first quarter of 2017 was down by 53.8% to US$37.5m, despite the fact that its revenue only fell by 14.1% to US$248m.

Indocement president director Christian Kartawijaya attributed the slump to tight competition in the domestic market from other producers, such as Karawang-based PT Jui Shin and Banten-based PT Cemindo Gemilang, which frequently sell cement at lower prices. "The profit decline is inevitable amid very tight competition. Meanwhile, the cake is getting smaller, so we've experienced the decline in profits and revenue," said Christian.

Indocement, a part of major diversified conglomerate Salim Group, also cited persistent cement oversupply in the domestic market this year, while demand was estimated to rise by only 5% year-on-year to 65Mt. This pushed down the cement price by 12% in the January-March period compared to the first quarter of 2016. "As long as there is an oversupply, we can't avoid a price war," Christian added.

Despite a gloomy outlook throughout this year, the company has still earmarked a sizeable US$128m sum for capital expenditure for expansion, although the figure is still 5.9% lower than 2016. Its key projects include the development of cement terminals and cement packaging terminals in Sumatra and other undetermined sites. Christian also said Indocement would also go ahead with its plan to construct a cement factory in Pati, Central Java, which is subject to public controversy because of claims that there is no legal basis to execute it.

Indonesia: Indocement Tunggal Prakarsa has purchased stakes in marine transport services firm Lintas Bahana Abadi through the company's subsidiaries, Bahana Indonor and Indomix Perkasa. The acquisition is expected to support Indocement's business activities, particularly in the marine transport segment, according to Indonesia Finance Daily.

“Bangun Sukses Niagatama Nusantara will divest its shares in Lintas Bahana Abadi to Bahana Indonor and Indomix Perkasa for US$2.1m. The acquisition is fully funded from the two subsidiaries' internal cash,” said Christian Kartawijaya, President Director of Indocement Tunggal Prakarsa. Lintas Bahana will become a subsidiary that is indirectly owned by Indocement.

Indonesia: Indocement Tunggal Prakarsa plans to discontinue production at its P1, P2, and P6 cement plants in Citeureup, West Java to improve efficiency and maintain margin stability amid weak demand in the cement industry.

"We seek to stabilise margins in 2015 by shutting down plants that are not efficient, including plants P1, P2 and P6 in Citeureup," said Christian Kartawijaya, president director of Indocement. He said that operations in plants P1, P2, and P6 were no longer efficient and that they were usually only used as backup when another plant was on maintenance. The lost production from the closure of the three plants will soon be replaced by production from the new 4.4Mt/yr capacity P14 plant, which is due for completion by the end of 2015.

Indocement also plans to reduce fixed costs and to postpone some of its non-urgent projects and expansions, including cutting down 2015's capital expenditure to maintain its performance. "We plan to decrease our 2015 capital expenditure to US$258m, as demand for cement has not risen amid a cement supply hike. Therefore, we will try to postpone our investments," said Kartawijaya. He added that the purchase of stone reserves and the investment in a new cement plant in Pati, Central Java will be postponed.

Indocement's revenues for the first six months of 2015 dropped by 6.6% year-on-year to US$654m due to an 8.8% decline of domestic sales to 8.2Mt. Its market share also shrank to 29.1% from 30.5% in 2014 due to weak domestic consumption, tight competition and oversupply in the national market. The decline in revenue and sales volume also resulted in 4.7% lower earnings (US$226m) before interest, taxes, depreciation and amortisation (EBITDA) and an 8.4% lower net profit at US$169m for the first half of 2015.