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Cement makers take cost-saving measures, boost sales
Publicly listed cement producers will take cost-saving measures as well as boost sales to maintain their performance this year following the recent cement-price cut by the government
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ublicly listed cement producers will take cost-saving measures as well as boost sales to maintain their performance this year following the recent cement-price cut by the government.
Cement makers also expect high cement absorption from President Joko 'Jokowi' Widodo's infrastructure development programs.
President Jokowi instructed last week that state-run cement producers reduce prices by around Rp 3,000 per sack to enable wider public purchase of cement with less financial burden.
Cement consumption is one of the key economic growth indicators in Southeast Asia's largest economy.
State-run Semen Indonesia corporate secretary Agung Wiharto said recently the country's largest cement producer might have to slightly revise its target this year following the price reduction. He, however, said the price cut could increase sales.
'Nevertheless, we can still cut costs here and there,' he said.
The company previously aimed to see 6 percent sales growth this year, in line with the expected growth in national cement demand.
With state-run cement makers lowering cement prices, private cement makers might have to lower their selling prices too to keep up with competition, analysts said.
Indocement Tunggal Prakarsa, for instance, has decided to reduce its average cement prices from around Rp 72,000 (US$5.8) per sack to Rp 69,000 following the President's instruction.
'Of course, the selling-price reduction will affect our revenue this year, given that we have to lower our selling prices by around 4 percent,' Indocement corporate secretary Sahat Panggabean told The Jakarta Post on Thursday.
Sahat refused to disclose the company's financial target this year.
'All we have to do now is cut our costs, especially from the fuel component, to offset the lower selling prices. We will also boost our sales volume to generate more revenue,' he added.
Indocement, the country's second-largest cement producer after state-run Semen Indonesia, currently produces and markets around 20.5 million tons of cement per annum.
The company is expected to complete a factory in Bogor in the last quarter of this year. The new facility will have a production capacity of 4.4 million tons of cement per annum.
'There will be additional production coming in later this year from a new factory that will help us increase our sales volume. Besides, we can only hope the government reduces electricity rates, which takes up around 30 percent of our spending, and boost infrastructure growth to boost cement demand.'
Meanwhile, Holcim Indonesia, in a recently published statement, said it would also adjust its cement prices following the President's announcement, adding that it would continue to look to other areas for savings to help mitigate the reduction and 'anticipate a rapid unlocking of infrastructure initiatives as a result of this action'.
'['¦] In a recent announcement on the revision of the 2015 state budget, the government intends to accelerate infrastructure spending to almost double year-on- year. We hope this cement-price reduction stimulates acceleration in projects under development as well as new ones,' Holcim Indonesia commercial director Jan Kunigk said in the statement.
