(astra.co.id)

In the third quarter of 2015, PT Astra International Tbk. (Astra) saw lower growth in its automotive sales and commodity-related businesses.

National car sales dropped 18 percent to 764,683 units as of September. 932,668 units were sold by the same month in 2014. National motorcycle sales dropped 31.08 percent to 1,544,964 units as of September. 2,255,001 units were sold by the same month in 2014.

The fall in the oil price slashed the benchmark coal price in October by 14.67 percent year-on-year (yoy) to US$57.39 per ton. Crude palm oil (CPO) faced the same fate. Its average price dropped 15 percent to Rp 7,221 per kilogram (kg).

"Astra has recorded a slowdown because our company is sensitive to commodity prices," president director Prijono Sugiarto said on Monday.

Astra'€™s automotive businesses recorded a 10 percent decline in net income. The automotive business recorded Rp 5.3 trillion in net profits as of September.

Astra has successfully retained a 50 percent market share in both the car and motorcycle segments.

The slump in coal prices led to a drop in heavy equipment sales. PT United Tractors Tbk. recorded a 40 percent decrease. The company sold 1,799 units of the Komatsu brand. The company'€™s market share fell to 37 percent from the 40 percent recorded last year.

United Tractors credited the weakening rupiah to the decline.

"Heavy equipment sales revealed a downward trend, from 8,500 units per year in 2014 to 5,500 units per year in 2015. Fortunately, Komatsu is still leading the industry with 37.8 percent of market share," said United Tractors president director Djoko Pranoto.

Astra Aviva Life saw an 11 percent decrease in net income and PT Bank Permata Tbk. '€“ a joint venture with Standard Chartered Bank '€“ saw a 24 percent decrease in net income.

Astra'€™s car financing-arm, Astra Sedaya Finance, recorded a 17 percent decrease in net profits, following on from falling car sales. PT Federal International Finance, a company that provides financing for Astra'€™s motorcycles, managed to record an 11 percent increase in net income.

PT Astra Agro Lestari'€™s net income crashed 92 percent yoy because of a massive decrease in the CPO price. The decrease squeezed its sales targets by 18 percent and the company booked significant losses in foreign exchange.

Diversification

In recent years, Astra has tried to boost contributions from its non-automotive sectors. The net profit margin (NPM) in Astra'€™s automotive business has gradually declined over the last four years. In 2012, the NPM was 9.71 percent. The NPM fell to 8.72 percent in 2013, 7.59 percent in 2014 and finally 7.51 percent in 2015.

The contribution of the automotive business to consolidated income remains at 36.69 percent as of September 2015.

Based on calculations made by the thejakartapost.com, increased expenses, despite a stable cost of goods sold, resulted in a lower earning before income tax (EBIT).

Currently, the EBIT to revenue ratio for this year is around 8.37 percent. In 2012, the ratio was listed at 11.09 percent. In 2013, the ratio was listed at 9.89 percent and in 2014, the ratio was listed at 8.48 percent.

Finally, the agricultural segment was Astra'€™s least successful business arm. The agricultural segment was bludgeoned by a weakening rupiah and falling commodity prices. This segment, which usually enjoys 11 to 20 percent in NPM, recorded just 1.93 percent in NPM in 2015. The poor performance in this particular segment is credited to US dollar denominated debts.

"We predict that in the fourth quarter, the figures will be quite the same," said Prijono. (ags)(+)

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