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Indocement net profit slumps 50% amid surging energy prices
Skyrocketing fuel and energy prices have cut into Indocement's first-semester net profit, but the company remains optimistic about sales in the second half of the year.
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Cement silos stand at the factory of state-owned cement manufacturer PT Semen Indonesia in Rembang, Central Java, in this undated photograph. (tribunjateng/Yayan Isro Roziki)
C
ement maker PT Indocement Tunggal Prakarsa Tbk. (INTP), part of Germany-based HeidelbergCement, has recorded a sharp fall in its net profit as energy prices skyrocket.
The publicly listed company announced on Thursday it had booked a net profit of Rp 291.54 billion (US$19.66) in the January-June period, 50 percent lower than the net profit of Rp 586.57 billion it recorded in the same period last year.
The slump in net profit was due to rising fuel and electricity costs, which had increased 39.34 percent year-on-year (yoy) to Rp 2.55 trillion, the company said.
Fuel and electricity were the largest contributors to a combined rise in cost of revenue to Rp 5.14 trillion, up 12.46 percent yoy from Rp 4.57 trillion, it added.
“Energy costs have been a major concern in the cement industry since last year. The ongoing [Russia-Ukraine] conflict has made the situation even more unpredictable,” the company said in a statement on Friday.
Read also: July 1 electricity hike to save state Rp 3.09t
Meanwhile, Indocement’s revenue grew 3.66 percent yoy from Rp 666.69 billion to Rp 691.10 billion in the first half of the year, according to the latest financial report it filed with the Indonesia Stock Exchange.
In response to the rising fuel and energy prices, the company increased the selling prices of its bagged cement products in March and June. But it remained optimistic, expecting year-end infrastructure spending and the hot weather would maintain its high sales volume for bulk cement.
Bulk cement comprised 26 percent of the total cement market in the first half, up from 21 percent of the market share during the same period last year.
Indocement projects that the bulk cement share would grow between 2 and 4 percentage points by the end of 2022.
Meanwhile, it expected coal prices to remain high on projections of high coal demand projected during the winter months in the Northern Hemisphere.
The country’s benchmark coal price (HBA) hit $323.90 per tonne in June, the highest since records began in 2009, according to Energy and Mineral Resources Ministry data.
“Indocement’s shares are inclined to get stronger in the long term,” Lucky Bayu Purnomo, an analyst at LBP Enterprise, told The Jakarta Post on Friday.
Editor's note: This article has been corrected to state that Indocement is part of HeidelbergCement, not of the Salim Group.
