T

he country'€™s largest state-run construction firm, PT Wijaya Karya (WIKA), reported slight growth in net profit last year, lower than the growth of other developers, due to growing financial costs that affected its bottom line.

In a statement published on the Indonesia Stock Exchange (IDX) website on Tuesday, the company revealed that it saw stagnant performance last year, with its revenue going up by about 5 percent year-on-year (yoy) to Rp 12.46 trillion (US$944.6 million) as a result of an industrial slowdown and project holdups.

The slowdown was caused by political tension during the election year as well as a state funding cut made by the former administration of Susilo Bambang Yudhoyono to cope with a ballooning fuel subsidy.

Meanwhile, the company'€™s net profit increased about 8 percent to Rp 615.18 billion by the end of last year.

This was in contrast to the 20 percent yoy increase in both its top line and bottom line in 2013.

As the construction business slowed last year, the company registered flat annual new contracts of Rp 17.5 trillion, compared with the Rp 17.75 trillion it made in 2013

In addition, the company saw its interest costs surge more than three times from Rp 64.03 billion in 2013 to Rp 197.7 billion, making it difficult for the company to boost its bottom line.

WIKA corporate secretary Suradi said the ballooning interest expenses were from the new notes the company issued last year to finance several projects, which later laid idle amid land acquisition problems.

'€œAmong the projects was the Ciliwung River tunnel project. However, we are upbeat that we will be able to meet this year'€™s targeted net profit of Rp 765 billion as we have resumed idle projects,'€ he told The Jakarta Post over the phone.

WIKA signed a contract with the Public Works Ministry to construct a Rp 500 billion tunnel connecting the Ciliwung River to Jakarta'€™s East Flood Canal in December 2013.

When completed, the 1.27-kilometer tunnel will have a flow capacity of at least 60 cubic meters per second. The tunnel is expected to ease the load of the Ciliwung River, which often overflows and causes flooding.

The company recently resumed the project, after a year of inactivity as it faced land acquisition problems.

WIKA issued two three-year medium term notes totaling Rp 800 billion late last year, with an interest rate of 9.8 percent per annum.

The growth WIKA booked last year is far lower than fellow publicly listed builders PT Waskita Karya and PT Pembangunan Perumahan, which booked net annual profit increases of 36 and 26 percent, respectively, by the end of last year.

WIKA aims to boost its net profit by about 24 percent this year and reap Rp 30 trillion in new contracts, growing by more than 70 percent compared to last year.

Meanwhile, another publicly listed construction firm, Acset Indonusa, reported that its revenue rose 33.66 percent yoy to Rp 1.35 trillion in 2014, while its net profit increased modestly by 5.36 percent to Rp 104.69 billion.

Acset recently became a part of heavy equipment company United Tractors, a subsidiary of diversified conglomerate Astra International Indonesia, after the latter acquired a 40 percent stake in the construction firm through a stock sale worth Rp 650 billion in January.

'€” JP/ Anggi M. Lubis