Heavy equipment distributor United Tractors (UT), part of diversified conglomerate Astra International Indonesia, reported a significant year-on-year (yoy) decline in Komatsu sales in the first three months of the year, hauled down by a slowdown in the mining sector, its main customer.

UT'€™s newly appointed president director, Gidion Hasan, said in a press conference after a shareholders meeting on Tuesday that the company sold around 763 Komatsu units in the first quarter.

The figure represents a 37 percent drop in heavy equipment sales compared with the 1,211 units marketed in the same period last year, far steeper compared with the 5 percent annual decline it recorded between January and March 2014.

Gideon, who previously served as vice president director and has now replaced the retiring president director Djoko Pranoto, said that the slumping sales were triggered by its buyers'€™ lackluster businesses '€” particularly those in the coal mining sector, the company'€™s main client.

UT, he said, had also decided to lower its annual sales target by 14 percent from last year'€™s realized figure, on the back of unfavorable markets.

'€œCoal prices are not conducive to support our heavy equipment business and, in this regard, we have decided to lower our sales target to 3,000 units for this year from the 3,500 units we sold last year,'€ he said.

The company has seen its Komatsu sales plunging in the past few years because of dwindling coal prices that have hit miners hard. Indonesia'€™s coal price reference (HBA) dropped by 27 percent last year as a result of market oversupply and China'€™s declining demands.

The mining sector contributed 35 percent to the company'€™s total heavy equipment sales volume last year, followed by the construction sector with 28 percent, agriculture with 23 percent and the forestry sector with 14 percent.

UT further saw its market grip in the country'€™s heavy equipment business slip to 37 percent to date, compared with the 40 percent it captured at the end of last year.

UT has also felt the pinch in all of its businesses, as all of its ventures are related to coal.

The company'€™s businesses comprise heavy equipment, coal mining contract services and coal mining.

Its net revenues were only slightly up by 4 percent yoy to Rp 53.14 trillion (US$4.1 billion) in 2014, while its after-tax profits attributable to owners increased by around 11 percent to Rp 5.37 trillion.

Heavy equipment contributed Rp 14.98 trillion to UT'€™s full year revenues, recording a 4 percent yoy decline in line with decreasing unit sales.

The mining contractor, represented by Pamapersada Nusantara, cashed in Rp 33.49 trillion last year, up by 6 percent yoy. The growth, however, was lower compared with 13 percent in 2013.

Coal mining contributed Rp 4.67 trillion in revenues in 2014, an increase by 22 percent, supported by a boost in production to mitigate plunging prices.

Gidion said that to cope with declining coal prices that had affected his company'€™s business, UT had resorted to developing products that would be suitable for any construction field, to compensate for lower mining equipment sales.

UT has also been working to diversify its business, having acquired a 40 percent share of publicly listed construction company Acset Indonusa through a Rp 650 billion stock crossing transaction in January and is looking to take over another 10.1 percent through a mandatory tender offer, the result of which is to be announced on Wednesday.

In February, it had also acquired a gold mine for $2.57 million in West Nusa Tenggara, the reserves of which are still being studied.

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