Displaying items by tag: Indonesia
Indonesia: According to the Jakarta Post, Semen Indonesia has lowered its prices by around 10% so far in 2015 to compete with rivals amid an economic slowdown that has seen a decline in the construction sector. With an increase in competition in the local market, Semen Indonesia had hoped that its exports would boost its revenues, according to company marketing director Amat Pria Darma.
President Joko "Jokowi" Widodo instructed state-owned cement producers to lower their prices in January 2015 to support the government's massive infrastructure projects. However, Darma added that state-run cement producers had to lower their prices further later in 2015 to cope with tighter competition and lacklustre demand. "A number of new plants have started operating and new supplies are coming in. We have to lower our prices to keep up with the market with overall plunging domestic demand," said Darma.
Semen Indonesia saw its domestic sales volumes fall by 5.3% in January – May 2015 to 9.91Mt, even steeper than the national decline in cement demand of around 3.8%. In May 2015 alone, the company's domestic sales fell by around 14%.
While cement demand has contracted since the start of 2015 on the back of the slowing economy, several cement producers have seen additional production from newly operating plants. New players have also entered the market, such as Semen Merah Putih. Semen Indonesia saw its market share in the country slip from 44% in 2015 to 43% in 2015. Darma said that he was pessimistic that Semen Indonesia could achieve its target of seeing sales volume up by around 6% in 2015, or even maintain it at the same position as 2014. The company will instead look to export markets as a strategy to cope with the domestic slowdown.
Semen Indonesia's exports rose by more than eight times from 22,155t in the first five months of 2014, to 184,181t in the same period of 2015. According to Agung Wiharto, the surges were not particularly good news as with high transportation costs, cement makers only exported their production when domestic sales were down and the contribution from exports was not significant. Exports, he said, were made to better ensure that its products were absorbed to maintain utilisation and efficiency. Wiharto said that Semen Indonesia was looking to initiate contract-based exports, in comparison to its current spot sales, in the near future if the economy does not show any signs of improvement. By relying on a six-month to one-year contract, the company could ship more cement, ensuring a more certain market.
"We hope to see our exports hit 1Mt in 2015. The prospect is good, given that some of our traditional markets have no cement producers," said Wiharto. Among Semen Indonesia's major export customers are Timor-Leste, Bangladesh and the Maldives.
Indonesia: Cement consumption fell by nearly 4% year-on-year during the first five months of 2015, the biggest decline in the January - May period in the last six years. The fall has been blamed on the country's slowing economy.
Data released by the Indonesian Cement Association show that cement demand in January - May 2015 fell by 3.8% year-on-year to 22.9Mt. It was the steepest drop so far in 2015. Consumption has declined consistently since February 2015. It was also the biggest drop recorded since 2009, when domestic demand fell by nearly 7% year-on-year due.
Indonesia's economy grew by 4.7% in the first quarter of 2015, the slowest in six years and since the start of the global financial crisis. Cement consumption has been a parameter in emerging markets' economic growth. "Cement demand has not fully recovered yet due to slower economic growth, relatively high interest rates, changes in property regulations and bleak commodity exports, which hampered property demand and consequently reduced cement consumption," said Marwan Halim from the stockbroking arm of United Overseas Bank Ltd, UOB KayHian, in a report. Bank Indonesia has maintained its interest rate at 7.5% to curb inflation and maintain its currency, while mortgage regulation and a lower price threshold for property products subject to 20% income have contributed to constraining the property industry.
Cement consumption in May 2015 fell by 7.9% year-on-year, much steeper than the 1.1% decline recorded in April 2015. It was the biggest May drop recorded since May 2009. Lower sales in May 2015 occurred in almost every part of the country, although East Nusa Tenggara and West Nusa Tenggara Provinces saw monthly sales rise by nearly 50% year-on-year. Commodity-based provinces experienced the highest declines during the month, with South Kalimantan and East Kalimantan making the steepest plunges with 41% and 24%, respectively. Even West Java, which traditionally has one of the highest cement consumption rates in Indonesia, suffered a sales decline of 8.3% year-on-year in May 2015.
Indonesia: Holcim Indonesia has reported that its profit for the first quarter of 2015, which ended on 31 March 2015, was down to US$2.49m from US$24.7m in the same quarter of 2014. Sales for the quarter were US$171m compared to US$180m in 2014. Gross profit was US$40.6m, compared to US$52.5m in 2014, while operating profit was US$11.9m, compared to US$28.5m in 2014.
"The cement industry as a whole faces some significant challenges, in the continued downward trend for this sector of the economy and the absence, so far, of anticipated stimulus from fiscal spending on upgrading infrastructure," said Kent Carson, CFO of Holcim Indonesia. "At the same time, competition has escalated significantly with considerable new capacity introduced, creating substantial oversupply in a market where costs continue to stubbornly climb."
Indonesia: Indocement Tunggal Prakarsa, part of Germany's HeidelbergCement, has secured shareholder approval to pay 94% of the company's 2014 profits, about US$382m, as dividends. Indocement booked US$403m in profits in 2014, a 5.2% increase from US$383m in 2013. During 2014, its net revenues totalled US$1.47bn, an increase from US$1.43bn in 2013.
President director Christian Kartawijaya said that net revenues had dropped by 3.8% year-on-year to US$331m in the first quarter of 2015 due to a decline in demand. He said that he hoped sales would increase in the second quarter, during which the government was expected to begin major infrastructure projects. "The recent cement price cut by the government affected our business, but it was not so bad because we were also able to cut costs," said Kartawijaya.
President Joko Widodo instructed state-run Semen Indonesia to lower the price of cement in January 2015, a move that led to private cement companies lowering their selling prices to keep up with competition. Indocement lowered its average cement prices by 4%. However, it also reduced its operational costs, including energy costs, distribution and logistics costs to compensate the fall in prices.
According to Indocement, domestic cement consumption grew by 3.3% in 2014, slower than the 5.5% growth seen in 2014, as the election year led to the postponement of a number of projects. Kartawijaya predicted that the number would grow to 3.5% until the end of the second quarter of 2015. In 2014, Indonesia's cement oversupply was 7Mt. This is expected to rise to 15Mt in 2015. "The demand slowdown will continue until the end of the second quarter if the government does not begin large-scale infrastructure projects," said Kartawijaya. The Indonesia Cement Association (ASI) has predicted that the Indonesian cement industry would see an increase of 6% in 2015 due to the government's large-scale projects, including new toll roads, railways, deep seaports and water dams.
Indocement has allocated US$344m in capital expenditure (capex) for 2015, higher than last year's US$298m. The capex will be used to finish its new US$153m plant in Pati, Central Java, while the rest would be invested in its gas turbine projects. Kartawijaya said that the new plant in Pati would start operating in the fourth quarter of 2015 and is expected to have 4.4Mt/yr of cement production capacity, boosting the firm's annual capacity up to 25Mt/yr.
Vietnam: The Indonesian state-owned cement manufacturer Semen Indonesia plans to acquire a second Vietnamese cement company.
Semen Indonesia's finance director Ahyanizzaman said that the company has allocated a total capital expenditure of US$546 – 857m in 2015 to expand its operations, which includes the acquisition of the Vietnamese company. He said that the company was currently conducting a due diligence audit on the Vietnamese firm and that this was expected to be completed by the end of the first half of 2015. "The Vietnamese company is a private firm, which has a local market share of about 4%," said Ahyanizzaman.
If Semen Indonesia goes ahead with the acquisition, it will be its second subsidiary in Vietnam. Through its Vietnamese subsidiary Thang Long Cement Company, it produces about 2.5Mt/yr a year in the country. Ahyanizzaman said the company would borrow up to US$77.9m to support the expansion plan.
Semen Indonesia president director Suparni said that the acquisition plan was part of the company's strategy to take advantage of the ASEAN Economic Community (AEC), which would be implemented before the end of 2015. "Domestic and regional operations cannot be separated when the AEC is implemented, so we want to synergise our business," said Suparni.
Indonesia: Former Corruption Eradication Commission (KPK) commissioner Bambang Widjojanto joined a protest on 16 April 2015 against the construction of Semen Indonesia's new cement plant in Rembang, Central Java. However, the Semarang State Administrative Court (PTUN) ruled on the same day that PT Semen Indonesia could operate in the area.
Bambang said that the construction and operation of the cement plant could pose a threat to the ecosystem in the region. The former KPK commissioner joined the rally in front of the PTUN, which is currently holding a trial on the legality of the local government's decision to allow PT Semen Indonesia to start mining activities in the area. "We hope that the judges listen to their consciences and side with the people," said Bambang.
Residents of Rembang, Central Java, have staged a series of rallies since 2014, protesting the plan to build a cement plant in Watu Putih. They claim that a plant would impact nearby water resources and directly degrade their livelihoods. The Indonesian Forum for the Environment (Walhi), an environmental non-government organisation (NGO) that has assisted the locals, has estimated that the potential loss of water could reach 51ML.
Indonesia: Semen Indonesia is carrying out a feasibility study for a new cement plant in West Java. The study is expected to be complete by December 2015.
Indonesia: PT Indocement Tunggal Prakarsa expects sales volumes to grow by 6% in 2015, according to CEO Christian Kartawijaya. The company reported cement sales of 18.8Mt in 2014, up by 3% from 2013. It will invest up to US$391m on capital expenditure in 2015. The company's 14th plant in West Java is expected to start operating in the third quarter of 2015.
Indonesia: State-owned PT Semen Baturaja Tbk has reported a 9.7% decline in sales volumes from 100,603t in January 2014 to 90,764t in January 2015. Zulfikri Subli, corporate secretary of Semen Baturaja, said that the decline is due to increased rainfall and weakening commodity prices, which resulted in property and infrastructure developments being delayed. "Until the end of January 2015, we managed to sell 90,764t valued at US$6.85m," said Subli.
However, Semen Baturaja expects sales volumes to rise in the following months, bringing total sales in 2015 to 1.75Mt and total revenues to US$133m. The company's performance in 2014 was equal with that in 2013, with sales volume of 1.26Mt.
Semen Baturaja is seeking external financing of US$58.7m from the issuance of bonds or bank loans to finance the construction of the Semen Baturaja II plant with a total investment requirement of US$260m.
Indonesia: Semen Indonesia has appointed its operational director Suparni as its new CEO. The state-owned company has taken the decision after receiving 69.6% votes from 76.1% its overall shareholders, according to The Jakarta Post. Suparni replaces Dwi Soetjipto, who has joined the oil and gas company Pertamina. The shareholders also appointed Rizkan Chandra to the board of directors.