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Soaring commodity prices boost Astra’s business in Q1
Mission accomplished: Diversified conglomerate PT Astra International president director Prijono Sugiarto (third right), newly appointed director Henry Tanoto (third left), independent director Bambang Widjanarko Santoso (second right) and other executives, Suparno Djasmin (left), Chiew Sin Cheok (second left), and Gidion Hasan, pose after the company’s annual shareholders’ meeting in Jakarta on Thursday
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span class="inline inline-center">Mission accomplished: Diversified conglomerate PT Astra International president director Prijono Sugiarto (third right), newly appointed director Henry Tanoto (third left), independent director Bambang Widjanarko Santoso (second right) and other executives, Suparno Djasmin (left), Chiew Sin Cheok (second left), and Gidion Hasan, pose after the company’s annual shareholders’ meeting in Jakarta on Thursday. The meeting approved dividend payouts worth Rp 6.8 trillion (US$510.3 million). (JP/Jerry Adiguna)
After a few turbulent years, Indonesia’s top diversified conglomerate PT Astra International is finally seeing the silver lining as soaring commodity prices significantly pushed up its performance in the first quarter of this year.
The publicly listed giant enjoyed spillover effects from surging prices of the country’s major commodities, namely coal and palm oil, as five out of its seven business lines booked net profit growth higher than 40 percent in the January-March period from last year, according to its financial report released Thursday.
Overall, Astra’s consolidated net profits jumped by 63 percent year-on-year (yoy) to Rp 5.1 trillion (US$382.77 million) during the period, while its revenues also rose by 16 percent yoy to Rp 48.8 trillion.
“The 63 percent annual growth was caused by various things, namely better CPO [crude palm oil] prices, a sudden [upward] movement in sales of heavy equipment, especially in mining and a greater market share of the automotive segment despite pressures [in the industry’s sales],” Astra president director Prijono Sugiarto told journalists in a press briefing.
The Australian thermal coal price hovered at around $86 to $90 per metric ton during the last four months after plummeting to around $50 last year.
CPO prices, meanwhile, increased to between $660 and $720 per ton early this year after plunging to as low as $580 per ton in the past year.
Indonesia relies heavily on commodities to fuel its economic growth. In 2015, growth fell to its slowest pace in six years, measuring just 4.79 percent. Indonesia is still trying to recover from this slump.
Higher commodity prices, which enhance people’s purchasing power, played a key role in jacking up Astra’s automotive business, the largest contributor to its overall business with a 45 percent share.
The firm pocketed 45 percent yoy growth in net profits to Rp 2.3 trillion during the first three months of this year, primarily driven by sales of new types of cars launched last year through to early this year.
The company’s car sales increased 27 percent yoy in the first quarter, much above the 6 percent overall increase in the industry, prompting its market share to rise to 57 percent from 48 percent.
In contrast to a 7 percent drop in domestic motorcycle sales, Astra managed to post just a 2 percent decline.
“It is still too early to say if the [vehicle] sales will increase or decrease this year, but we remain optimistic that improvements in commodity prices will have further effects [on Astra’s performance] in the third or fourth quarter,” Astra director Djony Bunarto Tjondro said. His firm, he added, was still assessing how the situation would turn out in the following quarters.
Astra’s second largest business line, namely financial services, has deteriorated over the last few years. This year, however, the business line has booked an encouraging performance, with its bottom line jumping 75 percent yoy to Rp 1.1 trillion from January to March.
Bank Permata, partly owned by the conglomerate, reversed losses amounting to Rp 376 billion in the first quarter last year to record a profit of Rp 453 billion. The lender’s gross non-performing loans (NPLs) improved to 6.4 percent from 8.8 percent as of December last year.
The heavy equipment and mining sector recorded 104 percent yoy growth in net profits to Rp 902 billion as of March.
Agribusiness, meanwhile, saw its bottom line skyrocket by 92 percent yoy to Rp 638 billion during the same period.
“All [indicators] show a positive trend. We can’t reveal any [targeted growth] number [for this year] yet, but qualitatively Astra will be better this year,” said Prijono of Astra.
Separately, NH Korindo Sekuritas Indonesia analyst Arnold Sampeliling voiced a bright projection for the firm, saying that the predicted positive commodity prices would remain a revenue booster for Astra’s subsidiaries, particularly plantation firm PT Astra Agro Lestari and heavy equipment company PT United Tractors.
