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Jakarta Post

Astra strengthens infrastructure unit as commodities, auto slow

  • Anggi M. Lubis

    The Jakarta Post

Jakarta   /   Tue, November 17, 2015   /  05:53 pm
Astra strengthens infrastructure unit as commodities, auto slow Meet up: Astra International directors (from left to right) Djony Bunarto, Suparno Djasmin, Widya Wirawan, president director Prijono Sugiarto and director Gunawan Geniusahardja share thoughts at an extraordinary shareholders meeting in Jakarta on Monday. The meeting decided on a change in the company’s articles of association to fulfill a new policy from the Financial Services Authority (OJK) on the shareholder meetings of listed companies.(JP/Jerry Adiguna) (from left to right) Djony Bunarto, Suparno Djasmin, Widya Wirawan, president director Prijono Sugiarto and director Gunawan Geniusahardja share thoughts at an extraordinary shareholders meeting in Jakarta on Monday. The meeting decided on a change in the company’s articles of association to fulfill a new policy from the Financial Services Authority (OJK) on the shareholder meetings of listed companies.(JP/Jerry Adiguna)

Meet up: Astra International directors (from left to right) Djony Bunarto, Suparno Djasmin, Widya Wirawan, president director Prijono Sugiarto and director Gunawan Geniusahardja share thoughts at an extraordinary shareholders meeting in Jakarta on Monday. The meeting decided on a change in the company'€™s articles of association to fulfill a new policy from the Financial Services Authority (OJK) on the shareholder meetings of listed companies.(JP/Jerry Adiguna)

The heavy equipment and coal unit of diversified conglomerate Astra International Indonesia, United Tractors (UT), is looking to expand its business to power supply, hoping to secure a power plant project in southern Sumatra.

Djoko Pranoto, Astra director and UT commissioner, told reporters on Monday that the publicly listed firm was currently looking for a partner to join a tender for a 2x300 megawatt (MW) capacity power plant project.

'€œWe are currently studying the plan,'€ Djoko said, declining to comment further on the investment or the potential partner. '€œThe tender for the southern Sumatra project will be held next year,'€ he added.

UT, as well as its conglomerate parent, have been facing constraints on their business this year amid unfavorable macroeconomic conditions and falling commodity prices, and has been looking to benefit from the country'€™s planned massive infrastructure projects.

UT saw its heavy equipment sales slip by around 40 percent year-to-date to 1,799 units as of September, as most of its sales were in the coal industry.

The company'€™s consolidated net revenue decreased by around 6 percent to Rp 38.3 trillion (US$2.78 billion) as it also faced slowdown in its mining contractor and coal mining business, but booked a 17 percent increase to Rp5.6 trillion in its net income thanks to gains on foreign exchange.

Its parent company, meanwhile, saw revenues from January to September this year slide 8 percent on an annual basis to Rp 138.18 trillion from last year'€™s Rp 150.59 trillion, while net profits dropped 17 percent to Rp 12 trillion during the reported period, as automotive '€” the backbone of Astra'€™s business '€” and palm oil sales shrank amid weakening purchasing power and dwindling commodity prices.

Astra'€™s car sales plummeted by around 20 percent year-on-year to 382,359 units during the first nine months of the year, and its motorcycle sales plunged 6 percent to 3.27 million units. Astra controls around half of the nation'€™s car market and 71 percent of the motorcycle market.

Astra president director Prijono Sugiarto said that while his company could not make predictions about next year, it believed that the economic slowdown would persist, citing an automotive business group'€™s projection that auto sales in 2016 would remain at this year'€™s levels.

'€œAll we can say is [the Association of Indonesian Automotive Manufacturers] Gaikindo has estimated that car sales next year will remain at 950,000 to 1 million units and motorcycle sales will remain at around 4.3 million to 4.7 million units,'€ he said. In 2014, domestic car sales hit 1.2 million units, while motorcycle sales hit 4.8 million units.

Prijono has previously said that his company would strengthen its infrastructure business, including toll roads and power plants, to benefit from the government'€™s massive infrastructure projects.

Astra'€™s infrastructure unit, Astratel Nusantara, is set to see its four toll roads fully operational sometime between 2017 and 2018, according to Astra director Paulus Bambang Widjanarko.

Paulus said Astratel would disburse Rp 1.5 trillion to Rp 2 trillion for capital expenditure, which would be used to develop its four toll roads, namely the 40.5-kilometer Jombang-Mojokerto toll road in East Java, 72.6-kilometer Semarang-Solo in Central Java and 72.4-kilometer Tangerang-Merak and 11.25-kilometer Serpong-Kunciran, both in Banten,

Astratel has a stake of between 25 percent and 95 percent in the four projects, which are currently in the land acquisition and construction process.

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