F

uel distributor company AKR Corporindo is upbeat about maintaining its net profit growth at around 20 percent this year despite sluggish first-quarter sales, saying that the company aims to boost its sales volume and distribution points to compensate for slumping oil prices.

AKR Corporindo director and corporate secretary Suresh Vembu said his company planned to see its fuel distribution go up by around 15 percent on an annual basis, in addition to the company'€™s efficiency strategy, to mitigate low oil prices that might pinch the publicly listed firm'€™s top line.

The company sold 1.5 million kiloliters of non-subsidized fuel last year.

'€œGlobal oil prices have declined by around 35 percent but we boosted our net profits by around 64 percent in the first quarter because as a distributor, we anticipated conditions by putting forward cost efficiency and maintaining a distribution margin,'€ he told reporters during a press conference on Tuesday.

'€œThere was also a 15 percent increase in our fuel [distribution] volume in compensation for the lower prices, which was why our declining revenue was not as large as slumping prices.'€

AKR, according to its first-quarter financial statement, saw its revenue down by around 15 percent year-on-year to Rp 4.8 trillion (US$376.62 million), triggered by around a 25 percent decline in its petroleum sales to Rp 3.35 trillion.

The company, however, saw its net profits up significantly by 64 percent to Rp 295.4 billion during the reported period, partly due to around a 20 percent decrease in its cost of goods sales to Rp 4.23 trillion.

Suresh said that his company was confident that fuel demands would increase this year, especially from its mining consumers, thus helping the company to meet its target to book a higher bottom line of 15 to 20 percent from last year'€™s figure of Rp 810 billion.

The coal mining sector, according to him, made up around 25 percent of the company'€™s sales volume, while non-coal mining contributed around 18 percent.
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'€œThere was also a 15 percent increase in our fuel [distribution] volume in compensation for the lower prices, which was why our declining revenue was not as high as slumping prices.'€

Other contributors in the company'€™s sales portfolio were the industry and commercial sectors with 25 percent, retail with around 20 percent and the energy sector with 12 percent.

'€œWe expect that demands will increase from our customers in the nickel, gold and copper mining sectors as some of the miners have started to resume export activities, now that they have concluded the construction of their smelters,'€ he said. The 2009 Mining Law has restricted raw mineral exports '€” effective in 2014 '€” and obliged miners to process their ores in smelters as export requirements.

'€œFurther, despite coal prices continuing to slump, coal miners have been projected to produce around 385 million tons of coal this year and that means there are a lot of activities that still need fuel.'€

Suresh said that his company had allocated $20 million to finance its gas station expansion, and was planning to build 40 gas stations this year in addition to its current 131 gas stations nationwide.

With 171 gas stations operating by the end of this year, Suresh said his company hoped to market at least 500,000 kiloliters of its total 645,000 kiloliters of subsidized fuel allocation. Last year, the company distributed 310,000 kiloliters of subsidized fuel of the government quota of 640,000 kiloliters because of infrastructure insufficiencies in channeling the allocation.

'€”JP/Anggi M. Lubis