[Kabar-indonesia] Semen Gresik to boost exports as local demand slumps

[Joyo at aol.com]

The Jakarta Post 
Saturday, July 1, 2006

SG to boost exports as local demand slumps

The Jakarta Post, Jakarta

As a result of a fall in domestic consumption, the country's leading cement 
producer, PT Semen Gresik (SG), says it will increase its exports from 13 to 15 
percent of this year's total sales volume target, or 2.1 million tons in 
absolute terms.

SG president director Dwi Soetjipto said Friday that the drive to increase 
exports was necessary as domestic cement consumption had dropped by three 
percent during the first five months of the year to 11.9 million tons from 12.2 
million tons in the same period last year.

"The new strategy is inevitable as we need to boost our sales amid poor 
domestic market conditions," Dwi told reporters after a shareholders meeting.

SG marketing director Chabib Bahari said market conditions this year were 
very different from last year, when the domestic cement market recorded 7 percent 
growth.

"We forecast no significant change in demand up to the end of the year," he 
said.

He said he expected that exports would increase the company's net revenue 
significantly as international prices were likely to increase to up to US$40 per 
ton due to increasing global oil prices.

In March, the international cement price stood at about $35.

Chabib added that the company was trying to expand its export markets.

"We are interested in the Middle Eastern countries as new export 
destinations," he said.

SG exported its products to a number of Asian countries in 2005, including 
Bangladesh, Singapore and Thailand.

Last year's exports contributed Rp 595 billion (US$64 million) to the 
company's total sales revenue, and were 31 percent higher than the Rp 454 billion 
recorded in 2004.

The shareholders meeting was told that the company booked a 101 percent 
increase in net profit last year to Rp 1.02 trillion from Rp 509 billion in 2004.

Net revenue came in at Rp 7.53 trillion, an increase of 24.1 percent from 
2004's Rp 6.06 trillion.

Dwi said that to promote sales this year, the company would increase its 
production to 16 million tons, slightly higher than its existing installed 
capacity of 15.82 million tons per annum.

To expand capacity, the company would invest Rp 700 billion, of which Rp 250 
billion would be used to build new plants and the remainder to construct 
terminals and storage facilities. He added that one new plant was due to come 
onstream this year.

SG chief commissioner Agus Tjahajana Wirakusumah explained that the company 
would build two new plants in Java and South Sulawesi, each with a designed 
capacity of 2.5 million tons per year.

With the expansion, the company expected to increase its production by five 
million tons in 2007, he said.

SG currently produces cement at its 7.10-billion-ton plant in East Java, and 
through PT Semen Padang's 5.24-million-ton plant in West Sumatra, and PT Semen 
Tonasa's 3.48-million-ton plant in South Sulawesi. Both firms are 
subsidiaries of SG.

Currently, the company controls about 45 percent of the domestic cement 
market.

The shareholders meeting also agreed to distribute a dividend worth Rp 262 
billion, or 25.7 percent of total net income. Each share will confer the right 
to receive Rp 443.12, up 44 percent from last year's Rp 307.2

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Joyo Indonesia News Service
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