State construction firms Wijaya Karya (Wika) and Waskita Karya reported modest growth in their first half financial results after projects were delayed because of state budget cuts and elections
tate construction firms Wijaya Karya (Wika) and Waskita Karya reported modest growth in their first half financial results after projects were delayed because of state budget cuts and elections.
Wika, the country's biggest construction firm, booked Rp 5.85 trillion (US$505.29 million) in net sales between January and June, up by 10.8 percent year-on-year (y-o-y), according to its financial report published on the Indonesia Stock Exchange (IDX) website on Friday.
The company's first-half (H1) net sales are still below half of its annual target of Rp 18.82 trillion. The full-year target is 22.5 percent higher than the Rp 15.42 trillion generated last year.
Wika's net profit rose by almost 10 percent y-o-y to Rp 348.14 billion during the period, while it targeted to see a 22.3 percent y-o-y increase in annual profit to Rp 678.65 billion by year-end.
Wika corporate secretary Natal Argawan said the company was lagging behind its targets due to project holdups in the first six months of year, concerning state budget cuts and the legislative and presidential elections.
'The President's decision to cut spending led to further delays in government infrastructure projects. At the same time, private customers chose to wait for the election to conclude before starting any projects, for a better market and political situation,' Natal said.
President Susilo Bambang Yudhoyono decided in May to slash a staggering Rp 100 trillion from the operational budget of his ministries, with the Public Works Ministry seeing the most drastic budget cuts, in a belt-tightening attempt to cushion the overshooting energy subsidy and lower-than-expected tax revenue.
'Our net sales are still behind target but our net profit is more important for us and we are halfway there. We are upbeat about achieving the target in the second half of the year as private investors will be back to business and the president-elect is said to be very concerned about infrastructure,' Natal said.
The July 9 election saw Jakarta Governor Joko 'Jokowi' Widodo win, and he will now succeed Yudhoyono later in the year.
In H1 2014, Waskita Karya amassed a net profit of Rp 60.7 billion, a 7.6 percent increase from the Rp 56.4 billion earned in the same period in 2013.
The company also gained Rp 3.1 trillion in revenue, only slightly more than the Rp 3 trillion it generated in 2013.
Waskita corporate secretary Haris Gunawan said the company was on track in terms of reaching its revenue target for 2014, but would likely be affected by changes in the state budget after budget cuts.
'We are carefully thinking about the target in relation to possible changes in state funds when it comes to building new infrastructure projects,' Haris said on Friday.
Haris added that Waskita had additional infrastructure projects to come, such as airports, toll roads and port constructions, in the second half of the year.
Previously, he said the state-run firm had secured Rp 3.5 trillion worth of new contracts between January and March, a quarter of which were overseas projects in the Middle East and Timor Leste.
Notable projects in this period included the expansion of Suai Airport in Suai, Timor Leste. 'The Suai project is still at the ground-leveling phase,' he added. (dyl)
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