Moody's Investors Service has affirmed Indonesian coal miner, PT United Tractors Tbk (IDX: UNTR)' Baa2 issuer rating - Photo by the Company

JAKARTA (TheInsiderStories) – An Astra International Group subsidiary, PT United Tractors Tbk (IDX: UNTR), prepared US$800 million in capital expenditure (capex) to develop its business lines, including the purchase of new heavy equipment owned by its unit PT Pamapersada Nusantara (PAMA).

Corporate Secretary of the company Sara K. Loebis explained, as much as 80 percent would be disbursed for PAMA business, where the company targets to buy 4,000 units of heavy equipment. The remaining, will manage other lines of business in the field of construction and energy.

“In first quarter (1Q) of 2019, $200 million has been spent by PAMA to purchase equipment. But because the market for heavy equipment declined last year, we lowered the purchase target,” she said.

Loebis reported that the company‘ market cap of the five business lines per march 2019 had reached Rp101 trillion ($7.11 billion). The five business lines, namely mining, mining contracting, coal mining, construction industry, and energy.

In the 1Q of 2019, sales of company-owned Komatsu products rose by 1 percent or 1,181 units from 1,171 units in 1Q of 2018. While Scania’ product sales also fell 44 percent by 148 units from 266 units in 1Q 2018. But UD Trucks sales fell 20 percent in 1Q 2019 amounting to 161 units from 202 units in 1Q 2018.

“Even so, revenue from the sale of Spare Parts and Service rose 2 percent by 2.2 trillion from 2.16 in 1Q 2018, because our customers no longer buy new tools but only want to maintain existing equipment,” she said.

She added that revenues from sales of spare parts and services accounted for around 25-30 percent of the company’s total sales. Loebis noted that PT PAMA’ coal production rose 14 percent to around 30.5 billion tons and 13 percent increased in overburden removal at 234.6 million bcm.

Meanwhile, the total coal sales volume of PT Tuah Turangga Agung (TTA) was around 2.5 million tonnes, down 2 percent including 325,000 tons of coking coal. And the total gold mining production in 2019 is 360 thousand ounces, from 8.1 million ounces of gold, the estimated reserve is 4.5 million ounces of gold as of Dec 2018.

In addition, net revenue was Rp22.6 trillion, up 19 percent from 1Q 2018 by Rp19 trillion. While, net profit rose 21 percent by 3.1 trillion from 2.5 trillion in 1Q 2018.

In the construction business, PT Acset Indonusa Tbk (IDX: ACST) recorded net revenue of Rp802 billion, increase from Rp734 billion in 1Q 2018. The company obtained new contracts is worth of Rp59 billion during March 2019 from the total target set for 2019 at Rp15 trillion, she said.

In addition, PT Astra Agro Lestari Tbk (IDX: AALI) also prepares funds of around Rp800 billion for corporate capex in 2019, specifically for replanting and additional production capacity. For additional capacity alone, AALI requires funds of Rp100 billion to Rp200 billion.

The investor relations Rudy Limardjo said that because there was no more expansion of new land clearing, the company would only do replanting and increase production capacity of Crude Palm Oil at around 20 percent.

“This year we are not opening new plantations, but we are only increasing CPO production capacity, from the previous 1.9 million tons last year, then it will increase by 10-20 percent this year,” he said in Jakarta.

Limardjo explained, by achieving a total capex of Rp293.16 billion in the 1Q of 2019, the company had produced 414 thousand tons of CPO, up 6.8 percent from the same period last year.

However, for the second quarter, the company still has not targeted total CPO production, but is expected to experience growth despite fluctuations in prices.

In the 1Q of 2019, he reported, AALI’ net profit dropped by 89.47 percent from Rp355.46 billion to Rp37.41 billion. This poor performance is significantly affected by the weak price of CPO commodities that become its mainstay.

“Since November 2018, CPO prices have plunged freely to the lowest level. While in 1Q sales, the company is still bound by a contract with the buyer at the offering price in November-December last year, which greatly affects the company’s financial performance,” he said.

However, Limardjo hoped that in the second quarter the company’ revenue will be better along with the increase in world CPO prices at the level of $540-674 per ton.

“If we see, this CPO price will continue to rise this year,” he said.

Meanwhile, net income, he said, dropped to Rp4.23 trillion from Rp4.45 trillion and the cost of goods increased to Rp3.89 trillion from Rp3.70 trillion, making gross profit sharply dropped to Rp333.24 billion compared to Rp745.51 billion in the year previous.

To increase revenue, the company diversified its business line by developing 4000 cattle breeding in Central Kalimantan, although its contribution was still small to the company’ total revenue. Last year, the company recorded sales of 10,000 cows.

“This year we plan to open a cattle fattening location in the company’s palm oil area in East Kalimantan with a capacity of 2000 heads,” he said.

Meanwhile, another Astra International uniy, PT Astra Graphia Tbk (IDX: ASGR) is preparing capex Rp50 billion to develop the business in this year. In addition, the company also cooperates with Fujifilm, a Japanese company for a total estimated 30 billion product distribution.

Reportedly, 1Q Astra Graphia’ net income amounted to Rp730 billion, up 16 percent from 1Q 2018 of 630 billion. While net income was 26 billion, down 27 percent from 1Q 2018 to 35 billion. This was due to an increase in sales expenses of Rp134 billion, or 12 percent from 1Q 2018 of 120 billion.

Written by Daniel Deha, Email: