W

idely diversified Bakrie and Brothers (BNBR), a business owned by the politically wired Bakrie family, reported a sharp increase in profits in the first half of this year thanks to a boom in the business group'€™s manufacturing units.

BNBR announced Sunday that net profits jumped from Rp 8.36 billion (US$715,141) in the first half of last year to Rp 168.71 billion over the same period this year. The business group'€™s total revenues surged by nearly 90 percent to Rp 3.7 trillion, compared with Rp 1.95 trillion in the first six months of 2013.

BNBR president director Bobby Gafur Umar said the rise in profits was driven by the company'€™s three manufacturing units, which contributed about Rp 2.90 trillion, or some 80 percent of total revenues.

'€œBuilding-material units run by Bakrie Building Industries, the automotive-components unit operated by Bakrie Autoparts and the metal industry run by Bakrie Metal Industries have become the backbone of our business,'€ he said in a statement.

The manufacturing units, he added, would become the company'€™s next core business given their significant contribution to the group'€™s total revenues. BNBR previously relied on trading, services, and investment for revenue.

He cited the increased business opportunities for the auto-components business that would follow the creation of the ASEAN Economic Community '€” which slated to launch next year '€” as among the factors spurring the company'€™s focus in manufacturing.

'€œGlobal automotive manufacturers are now eyeing Indonesia as their production base. Given Indonesia'€™s relatively low automotive penetration, with only 80 vehicles per 1,000 people, Bakrie Autoparts has a chance to become a top player in the industry,'€ Bobby said.

Bobby said that his company had prepared five-year expansion plans for BNBR'€™s manufacturing units, which included the formation of strategic partnerships, the acquisition of additional companies, a boosting of production as well as the introduction of new products.

Meanwhile, the company'€™s infrastructure unit, Bakrie Oil and Gas, is currently in the first stage of construction of a gas pipeline from Kepodang to Tambak Lorok (Central Java), while Bakrie Toll Indonesia is looking to set up a $1.3 trillion toll road connecting Cimanggis and Cibitung (West Java).

The company'€™s first-half financial achievements stood in stark contrast with last year'€™s performance, when it saw its bottom line nose-dive by nearly 100 percent from the Rp 214.35 billion booked in 2012. That profits plunge was due the to de-consolidation of Bakrie Petroleum International Pte Ltd and its subsidiary when the company sold its stakes in the firm to Altex Investment Ltd. BNBR closed the year with a total net loss of Rp 12.72 trillion.

Following the deal, BNBR ownership of Bakrie Petroleum International '€” which holds a 95 percent stake in oil trading firm Petromine Energy Trading '€” dropped to 41 percent, forcing the company to de-consolidate the subsidiary into its financial report.

Despite the dramatic profit and revenue surges it has booked this year, Bakrie'€™s debts are still in the spotlight. Accountant Tjiendradjaja & Handoko Tomo '€” who reviewed BNBR financial report '€” noted that a capital deficiency of some Rp 1.86 trillion might affect the company'€™s ability to survive.

The company'€™s total liability stands at Rp 13.2 trillion as of June, about Rp 10 trillion of which is in the form of short-term debts. Its total assets, meanwhile, stand at Rp 11.34 trillion.

'€œThese conditions ['€¦] indicate the existence of a material uncertainty that may cast significant doubt about the company'€™s ability to continue,'€ the accountant said.

According to a report by Bloomberg, BNBR holds $365.5 million worth of debts maturing in September.