C

ement manufacturer PT Holcim Indonesia (SMCB) foresees another good year sustained by the thriving demand for real estate from Indonesia’s growing middle class.

“The combination of rising interest rate levels, credit capacity and purchasing power of the middle class toward home ownership will present good opportunities in years to come,” the company said via a press release on Tuesday.

The release coincided with the announcement of the company’s 2012 financial report, in which Holcim announced it had earned net sales worth Rp 9.01 trillion (US$990.21 million) by the end of 2012, or 19.8 percent higher than the Rp 7.52 trillion in 2011.

Ascending sales had increased its income from operations by 20.6 percent year-on-year to Rp 2.03 trillion for the year that ended in December 2012. Consequently, profits for the year rose 26.9 percent year-on-year to Rp 1.35 trillion.

Cement naturally remained its primary sales driver, contributing 85.4 percent, equal to Rp 7.7 trillion, to net sales. Based on geographic distribution, Java, the honey pot of Indonesia, contributed 72.6 percent, or Rp 6.54 trillion, to net sales.

The other contributors to its sales were ready-mix concrete and aggregates such as crushed stone, gravel and sand.

Based on data from the Indonesian Cement Association (ASI), national cement consumption surged 14.4 percent to 54.9 million tons in 2012, with Java absorbing 60 percent of that total production volume given the frenzied construction of housing and commercial estates to meet the strong demand from the middle class.

Government-led construction projects have also equaled demand for cement.

Holcim added that they had “expanded in sync with market growth” with 8.59 million tons in domestic cement sales volume.

“Although market competition remained tight, improvements in distribution and support toward sales as well as customer service have allowed us to maintain our 15.6 percent market share in Indonesia,” they added.

Front runners in cement manufacturing are state-owned PT Semen Indonesia, formerly PT Semen Gresik, with a 41 percent share, followed by PT Indocement Tunggal Perkasa, with an approximate market share of 32.2 percent.

The firm added that they have managed to maintain its market share amid rising production costs due to fuel and raw materials.

The firm reported that their sales costs augmented by 21.5 percent year-on-year to Rp 5.66 trillion by the end of 2012. As much as 84 percent, or equal to Rp 4.76 trillion, of these costs were related to raw materials and manufacturing.

“However, the rise in productivity and capacity, the usage of alternative fuel sources and cost efficiency measures have helped mitigate the rise in per ton production cost,” Holcim said.

The company is constructing their second factory, Tuban II, in East Java to increase their production capacity by 1.7 million tons of cement per year. The factory will start production in 2015.