0 Indocement allocates up to $320m for expansion

Publicly listed PT Indocement Tunggal Prakarsa has set aside millions of dollars this year to finance the expansion of new plants, which are expected to help the company maintain its market share in the future. Finance director Tju Lie Sukanto said here on Wednesday that Indocement, the country’s second-largest cement maker, would allocate between US$260 million and $320 million in capital expenditure this year. 

“The amount will depend on the development progress of our factories. If there is fast progress, we can spend more,” Sukanto said. Indocement will finance the project from its internal funds. Sukanto said that the company had Rp 10.5 trillion in cash and cash equivalents at the end of 2012. The company is developing a new cement plant with a total production capacity of 4.4 million tons in Citeureup, West Java. Indocement has signed a letter of intent with China’s Sinoma Group on equipment procurement service and construction works for the plant, which is estimated to cost around Rp 5.5 trillion to Rp 6.5 trillion. 

It is expecting that the plant will be ready for operations in the third quarter of 2015. Indocement is also working on feasibility studies for two additional plants, which will be greenfield projects, one in Pati in Central Java and another outside of Java. Each of the greenfield projects is designed to have an annual production capacity of 2.5 million tons. This year, capital expenditure will also be allocated to complete works on a new cement finish mill in Citeureup. The cement mill’s total investment is estimated in the range of ¤80 million to ¤120 million and will have a capacity of 1.9 million tons. 

It is expected to be completed in the fourth quarter of this year. “Given that the mill will operate in the fourth quarter, its production will be around a quarter [of its full capacity],” Sukanto said. The cement mill will push Indocement’s total production capacity to 20.6 million tons by year’s end, about a 10 percent increase from its capacity of 18.6 million tons last year. Indocement’s plants run at a utilization level of 97 percent. Indocement sold 17.9 million tons to the domestic market last year, a 16.1 percent increase from its 15.4 million in 2011. 

Its national cement sales rose 14.5 percent last year to 55 million tons, according to figures from the Indonesian Cement Association. “Our market share last year was 32 percent, increasing from 31.5 percent in 2011. We will maintain our market share at above 30 percent this year,” Sukanto said. Indocement, whose shares are traded on the Indonesia Stock Exchange under the code INTP, booked Rp 17.29 trillion in revenues last year, increasing 24.5 percent from Rp 13.89 trillion in 2011. Its net profits rose 32.3 percent to Rp 4.76 trillion in 2012 from Rp 3.6 trillion a year earlier.

source : the jakarta post