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Domestic sales help Goodyear Indonesia amid falling exports
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The Goodyear Tire & Rubber Company's blimp flies over the company's headquarters during its first flight in March 2014. (Courtesy of/http://www.goodyear.com)
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oodyear Indonesia has recorded a profit of US$629,344 in the first quarter of 2016, marking a significant improvement over a loss of $205,864 sustained in the same period last year. Greater efficiency and stable sales on the local market supported the company's performance.
The company is focusing on the local market, where it achieves better margins than on its exports. Local sales were up 8.3 percent, while exports were down 13.1 percent in the first quarter of the year.
Meanwhile, the tiremaker reported progress in terms of efficiency, leading to a 5.87 percent reduction in the cost of goods sold (COGS). However, revenue was also down, falling by 2.9 percent to $40.6 million in the first quarter. The company reported a return on assets (ROA) of 0.52 percent and a return on equity (ROE) of 1.12 percent, the highest in three years.
"The tire market was dragged down along with the weak automotive industry. But we are still positive for this year, thanks to a lower benchmark interest rate. We are still an export-oriented company, but this year we are trying to increase the production for the domestic market," said corporate secretary Wicaksono Soebroto in Jakarta on Wednesday.
In 2015, Goodyear Indonesia sold 54.56 percent of its products in the ASEAN market, 18.56 percent in Oceania and the rest in other markets. The company suffered a 78.39 percent plunge in sales in Oceania, mainly because of an 80.13 percent decline in Australia.
Therefore, Goodyear Indonesia decided not to expand to other export markets this year. "Not for now, as market demand has changed," he said.
In the domestic market’s original equipment manufacturer (OEM) segment, Goodyear caters mainly to the needs of the lower to middle market segment, especially for commercial vehicles like vans and trucks.
The company is less aggressive in expansion this year, as reflected in a drop in capital expenditure. It allocated only 1 percent of its revenue to capex in 2016, compared to last year’s 22 percent.
Wicaksono said the existing plant still had excess capacity; hence, no additional expansion was needed.
"Currently, we produce 12,000 tires per day, using only 80 percent of the installed capacity. We don’t have any plans to add more production lines or machinery. We expect that in 2016 we can operate at full capacity," he said. (ags)
