Semen Gresik to maintain prices, focus on exports

Novia D. Rulistia ,  The Jakarta Post ,  Jakarta   |  Thu, 05/08/2008 11:03 AM  |  Business

The country's largest cement producer, PT Semen Gresik, says it will maintain product prices despite higher operational costs and will boost exports on concerns domestic consumption could weaken.

"Our exports, mainly to South Asia, the Middle East and Africa, now constitute about 10 percent of our total sales. We will develop those market further," President Director Dwi Soetjipto told reporters Wednesday without giving targets.

To minimize costs, he said the company would carry out a series of changes, including increasing the use of alternative energy.

About 32 percent of the company's spending for this year is allocated for energy, and 40 percent for distribution costs.

The company's earlier fears of losing purchasing power on fuel price increases were realized with the government's Monday announcement of a raise of up to 30 percent on June 1 to keep fuel subsidies from further stretching state spending.

"If domestic consumption is decreasing, we will have to increase our reliance on the export market," he said,

Although production costs have increased by 5 to 10 percent since December for most industries, the company's net profit in the first quarter of this year reached Rp 515 billion (US$55.8 million), or up by 56 percent from Rp 330 billion in the same period last year.

Total revenues in the first three months reached Rp 21.8 trillion or up by 21.8 percent from Rp 21 trillion in the first quarter of 2007.

Earlier media publications reported one of Semen Gresik's shareholders, Grup Rajawali, would release its total 24.9 percent ownership to the government.

Rajawali's CEO Peter Chambers denied the allegation, saying his company expected the cement producer to become one of the biggest in the Southeast Asia by acquiring factories abroad.

Rajawali bought the stake from international cement producer Cemex for $337 million in June 2006.

Total domestic cement consumption in the first quarter of this year rose 17 percent to 8.7 million tons, marking the highest first quarter growth since 2002. The increase was supported by a 25 percent growth in consumption outside Java and an 11 percent growth within.

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