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Astra first half profits up 11% despite weaker auto business
Publicly listed diversified conglomerate PT Astra International, the nationâs largest company by market value, booked Rp 9
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ublicly listed diversified conglomerate PT Astra International, the nation's largest company by market value, booked Rp 9.8 trillion (US$847.10 million) in net profits in the January-June period of this year, up 11 percent from the same period a year ago despite a drop in its main business ' automotive.
'The Astra Group business recorded mixed results in the first half of 2014, although operational volume remained high,' Astra president director Prijono Sugiarto said in a press statement released on Thursday, in reference to positive results from its financial services, heavy equipment and mining, agribusiness and IT sectors.
The automotive and infrastructure segments slowed, as Astra's car sales grew slower than sales nationwide.
'Although demand for automotive remained strong in the first half of 2014, the 'discount war' that has continued in the car market has had a negative impact on net profits,' the company said in the
statement, citing 4 percent growth in Astra's car sales, with 334,000 units sold, versus nationwide car sales growth of 7 percent to 642,000 units.
Growth in the company's motorcycle sales remained strong at 11 percent to 2.6 million units in the first half of this year compared to the same period last year.
Nationally motorcycle sales rose by 7 percent to 4.2 million units. Automotive sales are one of the main indicators of consumer demand in Southeast Asia's largest economy, which is 50 percent driven by consumer spending.
'[Astra's overall] financial performance until year-end is expected to remain good, although competition in the car market remains high and coal prices are expected to stay low,' Prijono said.
Global coal oversupply has driven prices lower and hurt businesses in the coal-mining sector, especially in Indonesia which is the world's top thermal-coal exporter.
Astra's heavy equipment arm, PT United Tractors, said its Komatsu brand saw a 10 percent decline in sales to 2,207 units in the first half of this year due to lower demand from the mining and plantation sectors which account for more than half of the company's sales.
'[However,] the depreciation of the rupiah against the US dollar is one of the main factors that made a positive contribution [to United Tractor's financial performance], boosting the company's gross profits by 34 percent, while net profits rose 42 percent to Rp 3.28 trillion,' the company said in a separate statement.
Astra's recently formed joint venture with British life insurer Aviva plc, called Astra Aviva Life, has helped the company's financial services arm to become the second biggest profit contributor with profit growth reaching 15 percent, to Rp 2.5 trillion, in the January-June period.
'Without taking into account the profits from the 50 percent acquisition of Astra Aviva Life, the net profits of the financial services division dropped 5 percent to Rp 2 trillion. The strong growth, especially from Federal International Finance, saw pressures from a decline in contribution from Asuransi Astra Buana,' Astra wrote.
Bank Permata, which Astra owns together with Standard Chartered, also saw a 2 percent decline in net profits to Rp 800 billion.
Shares in Astra traded 0.32 percent lower on Thursday at Rp 7,675, having gained almost 13 percent so far this year but under-performing the broader Jakarta Composite Index's (JCI) 19.3 percent advance.
