INDONESIA: Indocement Records 5.2% Growth in Profit in 2013

Indocement Tunggal Prakasa, the second-largest cement producer in the country, reported a 5.2 percent increase in profits last year as prices for building materials surged.

Net income rose to Rp 5.01 trillion ($440 million) last year from a year earlier, the company said in a press statement released on Tuesday.

Its revenues grew 8.1 percent to Rp 18.69 trillion from last year.

“The company used the good market momentum to increase prices, contributing to the increase in net revenue,” Indocement said, saying that its domestic selling price of cement increased by an average of 5 percent per ton in 2013.

Its sales volume of cement and clinker rose 1.2 percent to 18.2 million tons last year.

Still, profit growth at the company was much slower than the 32 percent recorded in 2012.

Daniel Lavalle, Indocement president director, said the company faced a very competitive market, while the rupiah’s decline increased expenses.

“A number of new competitors have entered the market, mostly importing cement from nearby countries. Other companies have declared their intention to enter the Indonesian cement market,” Lavalle said in the statement.

Indocement’s market share slipped to 30.4 percent of Indonesia’s 58 million-ton domestic sales last year.

In the previous year it had 32 percent. Total domestic sales grew 5.5 percent.

“Other challenges came from rupiah depreciation, which put pressure on production costs,” Lavalle added.

Last year the currency fell 26 percent against the US dollar as investors fled the country on concern of US tapering and Indonesia’s current-account deficit.

The company spent Rp 2.2 trillion in capital expenditure last year, investing in a new mill with a capacity of 1.9 million tons, and two new projects in Citeureup, West Java.

It also invested in a new batching plant, mixer trucks and a limestone quarry to support its expansion into the ready-mix cement business.

This year, Indocement expects domestic demand to grow by 6 percent, supported by demand from infrastructure projects, despite expectations of moderate growth in real estate development.