P

ublicly listed company PT Bumi Serpong Damai (BSD), one of Indonesia'€™s biggest real estate developers, has reported that its net profits dropped by almost half last year, mainly because of surging costs in various marketing and administrative posts.

According to BSD'€™s annual financial report released on Friday, the company managed to secure Rp 2.14 trillion (US$163.73 million) in net profits throughout 2015. The amount contracted by 43.98 percent year-on-year (yoy) compared to the Rp 3.82 trillion in net profits pocketed in 2014.

The report also revealed a jump in BSD'€™s total operating expenses by 15.47 percent yoy to Rp 2.09 trillion.

The expenses consisted of final property taxes and selling, general and administrative costs. Meanwhile, its cost of revenues also went up by 8.28 percent to Rp 1.57 trillion.

The increased costs had lessened the growing revenues of the firm, which is a part of Singapore-listed Sinar Mas Land. BSD booked a 10.7-percent increase yoy in revenues to Rp 6.21 trillion by last year-end while its assets value rose by 27.69 percent to Rp 36.02 trillion.

However, NH Korindo Securities head of research Reza Priyambada said on Friday that the sharp drop in net profits was not really a problem for BSD considering the firm'€™s ability to gain revenues, especially from its residential business unit. '€œThe decline is more about accounting. It doesn'€™t mean that their finances are at risk,'€ he said over the phone.

He noted that interest and financial costs had burdened BSD'€™s financial performance last year as the expenses jumped by 49.49 percent to Rp 574.97 billion last year. The increase was caused by soaring bond payments, which went up by 114.72 percent to Rp 5.69 trillion.

'€œFunds from the bonds were also used for business expansion. So, it'€™s fine,'€ he said, adding that if the payment was excluded from the company'€™s books, its net profits would appear far better.

BSD director Hermawan Wijaya wrote in a statement that his firm had widened its land bank in the popular BSD City area in Serpong, west of Jakarta, comprising 6,000 hectares of land, which it claimed as the largest township in Indonesia.

The acquisition cost up to Rp 2.07 trillion as of September last year, according to the statement.

The BSD City cluster contributed to around 70 percent or Rp 4.7 trillion of the total marketing sales worth Rp 6.8 trillion last year.

Furthermore, demands for residential areas worth Rp 4.4 trillion dominated the marketing sales in the period.

BSD aimed to book Rp 6.86 trillion in marketing sales this year, a relatively unchanged amount compared to last year.

'€œWe will launch several commercial projects in this year'€™s second half,'€ said Hermawan as quoted in the company'€™s statement, adding that the projects would include the Aerium in West Jakarta and Jagir in Surabaya, East Java.

The firm would rely more on commercial products this year as it projected the segment'€™s marketing sales to increase by 96 percent to Rp 3.08 trillion by this year-end and to contribute 46 percent, three-fold from that of last year, of the total value of sales.

Hermawan expressed optimism that his firm would be able to achieve the target as the country'€™s economy signaled a recovery.

'€œWe hope the positive trend will continue this year and encourage people'€™s purchasing power and the property sector'€™s growth,'€ he said.