Automotive manufacturer Astra Daihatsu Motor and plantation firm Astra Agro Lestari (AALI) are looking to produce higher volumes of cars and palm oil this year to penetrate the domestic market.

Iwan Hadiantoro, treasury and investor relations group chief of the two firms'€™ parent firm Astra International (ASII), said the diversified conglomerate was hoping to see the total production capacity of Astra Daihatsu Motor increase by around 70,000 to 80,000 units this year.

With the new capacity, Daihatsu will be able to produce between 530,000 and 540,000 units by the end of the year.

'€œThe process is ongoing and is taking place at both Daihatsu factories. They are running at full capacity now,'€ Iwan said.

Daihatsu has produced 460,000 cars at its two factories in Sunter, North Jakarta, and Karawang, West Java. Its sales figure reached 79,402 units as of May, making up 14.9 percent of total domestic sales.

'€œDemand for four-wheelers remains strong. At the moment, car penetration in the domestic market is still low, about 5 percent of the total population,'€ he said during a media gathering on Friday.

Iwan said that funds for the capacity expansion came from the
Rp 20 trillion (US$1.68 billion) in capital expenditure budget that Astra International had allocated for 2014.

Besides Daihatsu, Astra International also manufactures other vehicles under the Isuzu, UD Trucks, Toyota and Peugeot brands.

In total, Astra International sold 277,056 units in May, rising slightly by 3.3 percent year-on-year.

Despite the slight growth, Indonesian Automotive Industry Association (Gaikindo) data shows that Astra continues to dominate the automotive market with 52 percent.

'€œWe are also looking to expand exports of LCGCs [low-cost green cars] in the region, but have not decided on the time. Right now we are exporting them to the Philippines only,'€ he said.

Meanwhile, palm oil producer Astra Agro is aiming to start operating its three new plants later this year to boost output.

Astra Agro head of investor relations, Rudy Lumardjo, said on Friday that the new plants were located in East Kalimantan, Central Kalimantan and West Sulawesi, with each plant having a production capacity of 45 tons of crude palm oil (CPO) per hour.

'€œThis will add to our current production capacity of 1,280 tons of CPO per hour from our 26 existing plants,'€ he said.

Astra Agro head of public relations Tofan Mahdi added that the current period of unpredictable weather would unlikely influence his firm'€™s production capacity.

'€œWe have a good water management system in which we can adjust how much water we need to use to water our plantation both during dry and wet seasons,'€ he said.

The firm had a total of 282,600 hectares of planted areas with a total production of 707,000 tons as of May.

Astra Agro'€™s CPO sales dropped by 15.7 percent year-on-year (y-o-y) to 540,887 tons between January and May, in accordance with the company'€™s effort to boost its olein production.

Olein is a derivative product of CPO that is commonly used to produce biodiesel.

Astra Agro started producing olein this year to meet growing demand for biodiesel in the country.

The firm also saw a significant increase in average selling price (ASP) for its CPO produce, ascending by 34.5 percent in yearly basis to reach Rp 8,842 per kilogram during the first five months of the year.

The average selling price hike contributed to the firm'€™s net profit increase in the first quarter after suffering from a 25 percent drop in annual profit last year.

Astra Agro doubled its net profits to Rp 784.6 billion in the first three months of the year, compared to Rp 356.4 billion year-on-year.

ASII'€™s shares remained flat on Friday'€™s trading on the Indonesia Stock Exchange (IDX) at Rp 7,350 apiece compared to a day before. AALI'€™s shares climbed 1 percent on Friday to Rp 27,500 apiece.

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