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United Tractors pins hopes on aftersales, coal
Heavy equipment distributor PT United Tractors has said it will rely on third-party coal and spare-part sales to counter slowdown in all of its business sectors pending realization of massive infrastructure projects in the country
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eavy equipment distributor PT United Tractors has said it will rely on third-party coal and spare-part sales to counter slowdown in all of its business sectors pending realization of massive infrastructure projects in the country.
United Tractors corporate secretary Sara K. Loebis said the company ' a part of diversified conglomerate Astra International Indonesia ' could only expect growth from its spare-part sales to prop up its flopping heavy equipment business and would source coal from other parties to maintain sales in its coal mining business.
'With poor heavy equipment sales, we can only rely on our aftersales ' maintenance and spare parts ' to achieve growth. After all, companies still need to maintain existing machinery even when they're putting off purchasing new machinery. We expect aftersales to grow between 5 and 10 percent this year,' she said.
According to Sara, the firm's aftersales business contributes nearly 50 percent of heavy equipment sales.
'We're also trying to limit coal production to manage costs amid dwindling coal prices, but we will strive to see our sales stay at the same level as last year by purchasing from third parties.'
The company's sales of Komatsu heavy equipment slipped 38 percent year-on-year as of May to 1,173 units from 1,901 in the same period last year.
United Tractors' heavy-equipment sales have been facing constant decline since 2013, in line with slowdown in the coal industry amid pressure stemming from falling prices, dragged down by oversupply and declining demand from chief importer China.
Coal mining is the company's main market for heavy equipment sales. As of May, the mining sector contributed 32 percent to the company's total Komatsu sales, down from 33 percent last year.
Sales to other sectors, Sara added, were also weak, with slow progress in the construction and agriculture industries. The plantation business, she said, had expanded minimally so far this year, contributing to United Tractors' slumping sales.
Meanwhile, its coal mining business ' operated by subsidiary Tuah Turangga Agung ' saw its sales volume trimmed from 2.92 million tons as of May last year to 2.29 million tons in the same period this year on its effort to deal with lackluster coal prices. The company sold 5.94 million tons of coal last year.
Sara said the company did not expect growth in its mining contracting business, represented by its subsidiary Pamapersada Nusantara, currently the company's backbone.
'Pamapersada has consulted with its clients, and most want to keep production at the same level as last year amid dwindling prices. We have also projected that overburden removal will fall by around 8 percent this year as that is how coal miners strive to maintain their costs,' he said.
Pamapersada's production slipped by 10 percent on an annual basis from 47 million tons in the first five months of last year to 43 million tons this year. Sara attributed the decline to unfavorable weather conditions in the first quarter.
Its overburden removal ' or stripping materials above minerals being mined ' fell from 338.2 million bank cubic meters (bcm) to 307.3 million bcm during the same period.
The company's first-quarter net revenue was down by around 9 percent year-on-year to Rp 12.65 trillion, while net income rose by 4 percent to Rp 1.64 trillion, helped by the rupiah's depreciation.
