JAKARTA (TheInsiderStories) — To boost capacity production, state-owned steel maker PT Krakatau Steel Tbk (IDX: KRAS) aimed to acquire three local steel companies that have been stopped operating, said the chief executive today (01/04). The company will joined state-owned construction firm to reached those targets.
Krakatau Steel has cooperations with several state-owned construction enterprises on the steel procurement projects. In November 2018, it inked head of agreement with PT Waskita Karya Tbk (IDX: WSKT), PT Wijaya Karya Tbk (IDX: WIKA), PT Hutama Karya, PT Adhi Karya Tbk (IDX: ADHI), PT PP Tbk (IDX: PTPP), and PT Nindya Karya on the projects.
Without mentioning the partners’ name, CEO of KRAS Silmy Karim said, the company has started trial production in one of the three factories. He expect the acquisition of the steel maker to be executed in the second or third quarter of 2019.
Karim revealed, Krakatau Steel aims to get additional one million ton production from the existing capacity 5 million ton production a year. Until September 2018, the producer’ sales volume recorded at 1.59 million ton, an increase by 14.29 percent compared to the previous year.
He claimed that the condition is hefty to boost domestic steel sales increase amid the competition with imported steel. According to him, Trade Minister Regulation number 22 Year 2018 that scraps tariff and tax for steel imports, has made tough condition for domestic steel companies and triggered steel trade balance deficit.
Krakatau Steel is now focusing on restructuring its financial losses for the last six years. In the third quarter (3Q) of 2018, its financial loss has decreased by around 50 percent. But still burdened with US$37 million loss, even though the revenue was rising by 22 percent.
This year, the company is expected to gain profit. Now, the state-owned companies doing several efforts to revamp its business fundamental, such as by improving distribution and supply chain, and restructuring business organisation.
Written by Staff Editor, Email: email@example.com