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SMGR to acquire second Vietnamese cement firm
State-owned cement manufacturer Semen Indonesia (SMGR) would further strengthen its foothold in Vietnamâs cement market by acquiring another local cement producer in the country, the companyâs executive said
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tate-owned cement manufacturer Semen Indonesia (SMGR) would further strengthen its foothold in Vietnam's cement market by acquiring another local cement producer in the country, the company's executive said.
SMGR's finance director Ahyanizzaman said in Jakarta on Thursday that the publicly listed company had allocated a total capital expenditure (capex) of between Rp 7 trillion (US$545.8 million) and Rp 11 trillion this year to expand its operations, which includes the acquisition of the Vietnamese company.
He said that the company was currently conducting a due diligence audit on the Vietnamese firm and this was expected to be completed by the end of the first half of this year.
'The Vietnamese company is a private firm, which has a local market share of about 4 percent,' Ahyanizzaman said after the company's general shareholders meeting on Thursday.
If SMGR goes ahead with the acquisition plan, it will be Semen Indonesia's second subsidiary in Vietnam. Through its Vietnamese subsidiary Thang Long Cement Company (TLCC), SMGR produces about 2.5 million tons a year in the country.
Ahyanizzaman said the company would borrow up to Rp 1 trillion to support the international expansion plan.
SMGR president director Suparni said the acquisition plan was part of the company's strategy to take advantage of the ASEAN Economic Community, which would be implemented before the end of this year.
'Domestic and regional operations cannot be separated when the AEC is implemented, so we want to synergize our business,' Suparni said.
SMGR earlier said it planned to build a cement plant in Myanmar, but it was delayed because it failed to reach a business agreement with its local partner.
SMGR, which operates factories in Gresik, East Java, also has several local subsidiaries including Semen Padang, Semen Gresik and Semen Tonasa.
Suparni said the company expected a higher growth in sales volume in the third and fourth quarters this year after posting a sales growth of just 1.8 percent in the first quarter.
'We plan to export between 150,000 and 200,000 tons in the first half. In the second half, exports will be reduced because domestic demand will usually reach its peak,' Suparni said.
According to the company's review, Indonesia's cement consumption reached 59.91 million tons as of last year, a 3.3 percent increase from 58 million tons a year earlier.
Semen Indonesia expects to increase its production capacity to 40 million tons by 2017, which will be supported by its two new facilities in Rembang, Central Java, and Indarung, West Sumatra, currently under construction.
The two facilities are expected to add a total capacity of 6 million tons annually to the company's current production of 31.8 million tons, Suparni said.
Suparni said the company was also expecting add an additional capacity of 2 million tons through acquisitions of cement plants in the country.
Suparni said further that the company would also build a new plant worth Rp 1.95 trillion in 2016 in Ja-
yapura, Papua with a total capacity of 1 million tons per year. On Thursday, the company's annual general shareholders meeting approved a 40 percent dividend payment worth Rp 2.2 trillion out of its total net profits of Rp 5.6 trillion as of last year, with price per share at Rp 375.3. In addition, Suparni said the meeting approved new directors Aunur Rosyidi and Rizkan Chandra, as well as new commissioner Sony Subrata.
