Jul 30, 2010

Indocement profit jumps 39.9%

Indonesian Cement Producer PT Indocement Tunggal Prakarsa Tbk (INTP) jumped 39.9% to Rp1.64 trillion compared to Rp1.17 trillion. Net revenue grew by 11.8% to Rp5.36 trillion compared to previous year Rp4,80 trillion. 
Daniel Lavalle as the President Director of INTP said, the continuing strong domestic demand in particular from residential market since the last quarter of 2009 has brought Indocement’s domestic sales volume in the first semester 2010 increased by 17.1% to 6.3 million tons from 5.3 million tones whereas the national domestic cement demand only increased by 11.5%. 
This resulted in higher market share of the company in 1H2010 at 31.2% compared to 29.7% in 1H09. Indocement market share increase is supported by the current excess capacity given that the company is the only cement producer in Indonesia with significant capability to meet current high growth of domestic market. The export sales volume shrank by 39.1% to 0.47 million tones from previous year 0.77 million tones as the Company focus more to fulfill the high domestic demand. 
Total sales volume in 1H2010 was 6.7 million tones, higher by 10.0% than previous year at 6.1 million tones. The strong domestic demand and clear focus of the company to optimize the procurement and supply chain operations to cope with the escalating cost in almost every aspect of operation and the ongoing appreciation of IDR against USD, as over 60% of the company’s purchases are in USD equivalent, have significantly bring positive impact to the company’s1H10 performance compared to the same period last year. 
The gross profit margin improved to 51.7% from 46.7% or in the amount of Rp2.77 tillion than previous year IDR2.24 trillion. 
Operating expenses increased by 17.8% to Rp722 billion from Rp613 billion mainly due to higher logistic costs as the impact of higher sales volume and more sales to outside Java area. Therefore, income from operations climbed by 26.0% to Rp2.05 trillion from previous year Rp1.63 trillion and operating margin strengthened from 34.0% to 38.3%. 
EBITDA also increased by 24.0% to Rp2.35 trillion from Rp1.90 trillion. Meanwhile, EBITDA margin improved from 39.6% to 43.9%. 
Indocement believes that strong domestic demand is keep continuing in the current and near future. Therefore, the company is planning to have different projects in optimizing the production and logistic facilities to be able to supply to the strong domestic market. 
In addition, Indocement also strengthens its ready-mix concrete operations in order to be ready for increasing infrastructure works in near future, the company will use the current existing strong balance sheet to anticipate these capital expenditures.

Disclosure: No position at the stock mentioned above.

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