PP sets 20% growth target despite gloomy economic outlook
Anggi M. Lubis
The Jakarta Post
State-owned construction firm PT Pembangunan Perumahan (PP) is positive it will be able to book a 20 percent increase in both profit and revenue in 2014 despite the expected slowdown in the country's economic growth during the year.
PP finance director Tumiyana said in Jakarta on Wednesday that with the separation of the property division into an independent company and with the projected 15 to 20 percent growth in Indonesia's property sector, the company would be able to achieve its 2014 growth target.
He said the company's plan to acquire heavy equipment company PT Prima Jasa Aldodua would help the firm meet the target.
PP has recently set up new subsidiary PP Properti to take over its property division.
The separation is projected to boost the holding company's average property sales by Rp 1.9 trillion and increase PP's profit by 13 percent in five years and by 20 to 25 percent in 10 years. So far, the property division contributed around 4 to 6 percent to PP's total earnings.
Up to now, building construction makes 64 percent of PP contracts while infrastructure makes about 17 percent.
He said the financial results were quite encouraging in the first nine months of this year, leading the company to raise its revenue and profit target set for this year.
The revenue and profit target for 2013 have been raised to Rp 12.3 trillion (US$1.05 billion) and
Rp 407 billion respectively from the previous Rp 10.2 trillion and Rp 307 billion.
'With this year's successful result, we are optimistic about seeing our profit and revenue increase by 20 percent next year,' he said. The revised target reflects a 53.75 percent increase in revenue compared to Rp 8 trillion and a 31 percent increase in profit from Rp 309 billion in 2012.
The revision, he said, was also made due to the company's success in securing 70 percent of its annual contract target of Rp 20 trillion.
PP's higher growth target contrasted to those of other firms, who mostly set lower targets due to a expected slowdown in the economy. The government estimates gross domestic product (GDP) growth will slow to 5.3 percent next year from this year's target of 5.6 percent.
According to its latest financial reports, PP booked an 84.03 percent increase in revenues to Rp 7.26 trillion in the first nine months of this year from Rp 3.94 trillion in the same period in 2012.
It also booked a 106.71 percent year-on-year profit increase to Rp 218.35 billion up to September this year from Rp 105.63 billion in the same month last year.
Tumiyana explained the results were supported by the company's various construction and property projects, which included coal-fired power plant Duri Riau, Kuala Namu Airport, Cikampek-Palimanan toll road, Donggi Senoro road, Vida View Apartment in Makassar, and Intermark Apartment in Serpong.
PP has also expanded its work to Timor Leste by constructing the neighboring country's finance ministry building and some roads. It also acquired concrete precast company PT PP Dirganeka earlier this year.
Harry Nugroho, PP's business expansion director, said prospects for expanding the property business were promising, considering that the company currently had around 40 hectares of land bank to develop future projects.
PP Properti's upcoming projects include a Rp 3 trillion joint-venture housing project with state-owned oil company PT Pertamina in Tanjung Duren, West Jakarta.
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