JAKARTA (TheInsiderStories) - The aggregate company, PT Tarabatuh Manunggal, operates a new andesite mining asset with an investment value of Rp200 billion (US$13.60 million), said the parent on Tuesday (11/03). The company is the unit of cement producer, PT Indocement Tunggal Prakarsa Tbk (IDX: INTP).
The management explained, the location for the operation of the site located in Cariu, Bogor, West Java, was carried out on Oct. 30, 2020. The issuer’ director, Antonius Marcos, revealed the production capacity of the new mine is 600 tons per hour.
The expansion, he said, to support the subsidiary effort to fulfill the ready-mix concrete industry needs for building materials. According to Research and Markets, Indonesian ready-mix concrete market is expected to grow 7.79 percent since 2019 to 2024.
Major factors driving the market are the increasing investments in the real estate sector and superior technical properties over normal concrete. Ease of availability of potential substitute is expected to hinder the growth of the market studied.
During the pandemic period, Indocement reported the manufacturer’ revenues dropped 11.60 percent from Rp6.98 trillion to Rp6.17 trillion in the first half of 2020. Net profit also decreased by 26.56 perent to Rp470.02 billion from last year Rp640.02 billion in the same period.
In this year, the management sees the volume of cement sales will contraction to 7 percent. To anticipated the impact to the company’ operation, now the producer focuses on efficiencies by cutting the capital expenditures, closing part of the factory operations, cutting salaries of the top management levels up to 20 percent.
Indocement also cut its capital expenditure budget from the initial planned of Rp1.4 trillion to Rp1.1 trillion. Not only that, last May, the issuer also suspended its seven of its factories in order to save 35 percent of operating costs. Currently, the company has 13 factories located in Cirebon and Citeureup, West Java.
Data from the Indonesian Cement Association showed, the national cement sales in the first quarter (1Q) 2020 dropped by 5.4 percent to 16.28 million tons (MT) compared to the same period of last year. The association also reported that domestic consumption dropped 4.91 percent to 14.9 MT of cement and exports fell 2.46 percent to 1.39 MT of cement.
Total national output fell 4.71 percent to 16.29 MT of cement in 1Q 2020 from the same period last year of 17.09 MT of cement. In the same period Indocement‘ market share remained relatively stable at 26.1 percent with positive growth in key markets such as Java from 34.0 percent to 35.2 percent and Sumatra from 11.3 percent to 12.0 percent.
So far, the company has stopped the production of seven factories operating in Cirebon and Citeureup, West Java. The company owned by Salim Group now operates 13 factories located throughout Indonesia with a total production capacity of 24.9 MT of cement.
Indonesia’ cement industry currently facing an oversupply period. Based on data from the public works and public housing ministry, the national cement industry is oversupplied by 37 percent or 40.9 MT of cement from the needs of 59.21 MT of cement for infrastructure development in 2020.
Entering the 2020 – 2024 National Medium-Term Development Plan, infrastructure development remains a priority for the government. Evidenced by the total funding needs for infrastructure reached Rp2,058 trillion for the period.
US$1: Rp14,700
Written by Editorial Staff, Email: theinsiderstories@gmail.com
