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Astra sees lower profits amid sluggish business
Publicly listed diversified conglomerate Astra International (ASII) posted a slight decline in its consolidated profit in 2014 due to slower growth in the business groupâs automotive and manufacturing divisions
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Publicly listed diversified conglomerate Astra International (ASII) posted a slight decline in its consolidated profit in 2014 due to slower growth in the business group's automotive and manufacturing divisions.
According to its financial report submitted to the Indonesia Stock Exchange (IDX) on Thursday, the company booked a 4 percent year-on-year (yoy) increase in total revenues to Rp 201.7 trillion (US$15.68 billion).
However, its net profit was down 1.2 percent to Rp 19.18 trillion from what it recorded in 2013. Astra attributed the decline to lower net profits booked by its automotive, infrastructure and logistics divisions.
While profits from the automotive division dropped 13.7 percent yoy to Rp 8.48 trillion, profits from infrastructure fell more than 30 percent on a yearly basis to Rp 490 billion.
In a statement, Astra president director Prijono Sugiarto said intense 'discount wars' in the automotive sector had negatively affected profit margins. At the same time, Astra saw its total car sales slump 6 percent to 614,000 car.
'[The lower car sales] had reduced [Astra's] market share from 53 percent to 51 percent. Throughout 2014, Astra had rolled out 19 new models and nine face-lifted models,' he said.
Subsidiary PT Astra Otoparts (AUTO) contributed to the low profit as well, even though the automotive parts maker was able to boost its sales volume by 15 percent.
AUTO's own financial report reveals that it suffered from higher labor costs and foreign exchange volatility that pushed down its margin.
In infrastructure and logistics, Prijono said subsidiary PT Serasi Autoraya, a vehicle rental service provider, reported a lower margin due to slow business among its mining clients last year.
Meanwhile, Astra's financial report shows that its other business divisions recorded better profitability, most notably agribusiness and information technology, up 39 percent and 24.2 percent, respectively.
As reported before, subsidiary PT Astra Agro Lestari (AALI) managed to jack up its net profits by 39 percent. AALI's average crude palm oil selling price improved as well in 2014, climbing 13.8 percent yoy to Rp 8,282 per kilogram.
In information technology, subsidiary PT Astra Graphia (ASGR) posted a 24 percent growth in profit, generated from the divestment of its shares in AGIT Monitise Indonesia, which is a mobile solutions provider.
Astra's financial services and heavy equipment divisions also booked positive performances last year, according to the financial report.
The financial services division ' covering banking, automotive financing and insurance ' reaped a total of Rp 4.75 trillion in net profits in 2014, 11.1 percent higher than 2013.
Prijono said in the statement that it would remain cautious about the immediate outlook, given the uncertain external macro environment, competition in the car market and the likelihood of coal prices.
'[However] we note that the Group is well financed and the quality of our businesses provides the basis for excellent prospects over the longer tem,' he said.
According to the financial report, Astra controlled Rp 236.03 trillion (US$18 billion) in assets by the end of 2014. Its liabilities reached Rp 115.71 trillion and its equities amounted to Rp 120.32 trillion.
Astra submitted its financial report minutes after the end of trading day, in which its shares fell 1.2 percent to Rp 8,050 apiece from the previous day.
