Slowing coal sector hits United Tractors

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Heavy equipment distributor PT United Tractors (UNTR) reported a lower sales volume in the first semester of the year as a consequence of the slowing business of coal mining firms, which remain the company’s main customers.

UNTR sold 4,231 units of heavy equipment in the first half of the year, a 2.35 percent drop compared to the 4,333 units sold in the same period last year. Sales of heavy equipment to mining companies contributed about 60 percent to that figure, reaching 2,556 units in the January to June period, but still fell by 13 percent compared to 2,949 units in the same period of 2011.

UNTR also saw lower sales of heavy equipment to forestry firms, with a 9 percent decline to 241 units delivered in the first half of the year versus 265 units in the same period last year. Meanwhile, sales to agriculture firms rose 31 percent to 897 units during the January to June period, from 680 units. Sales to the construction industry also rose 22 percent to 537 units from 439 units.

“There are various reasons surrounding the decline, including competitions with other distributors and declining coal prices, which have made miners rethink their spending on new equipment,” UNTR corporate secretary Sara Loebis said on Friday.

“We saw that a number of customers canceled their orders, leading to a sales drop in June,” she added.

UNTR, the subsidiary of diversified conglomerate PT Astra International, sold 502 units last June, a significant 32 percent drop compared to the 742 units it sold in June last year. Sales in June, which were the lowest during the first six month, represented a 35 percent monthly drop compared to the 773 units sold in May.

Sara said the company might see flat heavy equipment sales at 8,500 units this year, from the previous target of 9,500 units. The company’s sales last year reached 8,467 units.

“We will review the number in line with developments over the next months. Seeing the current development of the coal mining business, it is difficult for our sales to rebound,” Sara said.

UNTR did however see better growth in its mining contracting and coal mining businesses, run by its subsidiaries.

In its mining contracting business, UNTR’s wholly owned subsidiary PT Pamapersada Nusantara’s overburden removal reached 415.2 million bank cubic meters (bcm) in the first half of the year, increasing 13 percent from 366.4 million bcm year on year. Pamapersada also worked for coal mining contracts producing up to 45.1 million metric tons in the first semester of the year, a 12 percent increase compared to the 40.2 million metric tons in the same period last year.

In the coal mining business, UNTR’s subsidiaries PT Tuah Turangga Agung and PT Prima Multi Mineral reported sales rising 38 percent to 3.05 million metric tons during the January to June period of the year compared to 2.21 million metric tons in the same period last year.