Profit from automotive division of Indonesian conglomeration company, PT Astra International Tbk (IDX: ASII) dropped by 14 percent to Rp6.1 trillion (US$435.71 million) in the nine months of 2019 - Photo by the Company

JAKARTA (TheInsiderStories) – Profit from automotive division of Indonesian conglomeration company, PT Astra International Tbk (IDX: ASII) dropped by 14 percent to Rp6.1 trillion (US$435.71 million) in the nine months of 2019, mainly due to a decrease in the volume of car sales, rising costs-production and the effect of the translation of foreign exchange rates.

Based on the company data released today (10/31), Astra car sales fell 7 percent to 396,000 units until September followed the national car sales was lowered 12 percent to 754,000 units. But the Group’ market share lift from 50 percent to 53 percent.

Inversely, Astra Honda Motor‘ sales rose 5 percent to 3.7 million units and market share slightly up to 75. While, national motorcycle sales increased 4 percent to 4.9 million units.

In the 3Q of 2019, Astra’ net profit down 7.0 percent to Rp15.87 trillion from same period in 2018 worth of Rp17.07 trillion. While total revenues rose 1.0 percent from Rp174.88 trillion to Rp177.04 trillion.

“The achievement of the Group is still expected to be benefited by improved performance in the financial services business and contributions from new gold mines acquired,” said the president director Prijono Sugiharto in a written statement today.

In the future, he asserted, challenges to weak domestic consumption and low commodity prices still need to watch out. He revealed, the downtrend on the automotive businesses has been convert with income from heavy equipment division, mining, construction and energy, financial service, infrastructure, and logistic.

As part of business diversification, Astra now looking local start-up engage in the logistics business. The company prepared investment from pre-seed series to Seed B series to expand its digital business.

“We explore from the list in Plug & Play. For example a logistic company. We are talking about now. Almost deal,” said director at Astra, Paulus Bambang. He denied giving further details on the plan.

This year, Astra prepared capital expenditure around Rp27 trillion from last year Rp40 trillion. Part of it will spend on the digital business, said Sugiharto.

The conglomeration company has entered the digital business by investing in the ride-hailing provider GoJek. The publicly listed has invested amounting to $250 million at the unicorn.

Talking on its core business, Sugiharto expects by the end of this year the company market shares in car sales could stay at 50 percent from now 53 percent of total national sales. The tight competition among the car manufacturer become the reason for the declining of the company market shares, he adds.

He sees the national car sales around 1.05 million units or dropped 10 percent compared to last year and for export market 200,000 units. Then the motorcycle sales are estimating the same with last year around 6.3 million units and heavy equipment sales will be dropped 20 percent to 3,600 units compared to last year

But he believed that the Indonesian market still prospective for four and two-wheels vehicle. He stated, “Car sales are still prospective and will prepare investment for it.”

In other sectors, Sugiharto said, the manufacturer will continue looking infrastructure projects and other potential business. In toll project, he claimed, Astra would manage 1,200 kilometers of toll road across the nation manage by PT Astra Infra.

Two toll road projects, Kunciran – Serpong toll road in Jakarta area and Surabaya – Moncokerto in East Java will operate. While PT United Tractors Tbk’ (IDX: UNTR) power plant project joined with Japan’ Sumitomo Corp. and Kansai Electric Power Co. Inc. with total capacity 1,200 megawatts will operate soon.

He believed the new businesses will support its financial performance in the future. in the first half of 2019, the company profit dropped six percent to Rp10.38 trillion from prior year amid the lower commodity price, coal, heavy equipment, and car sales.

US$1: Rp14,000

by Linda Silaen, Email: linda.silaen@theinsiderstories.com