The Jakarta Post
PT Surya Toto Indonesia, a subsidiary of Japan-based Toto Ltd., is doubtful its sales will increase this year after a decline in its first quarter ( Q1 ) performance.
The sanitary ware company’s president director Hanafi Atmadiredja said the continued economic slowdown had hampered the company’s sales in Q1 and the figures would not change for the rest of the year.
“Growing our sales in Indonesia this year is a long shot due to the slow economy. People are saving on household furniture expenses,” he said during Toto Indonesia’s general shareholders meeting in Jakarta.
Toto Indonesia’s sales from January to March reached only Rp 538 billion (US$39.56 million), down 8 percent from the same period last year when the company generated Rp 585 billion.
Its domestic sales suffered a year-on-year decline of 7.3 percent to Rp 404 billion, while overseas sales fell 10 percent to Rp 134 billion.
Recognizing that his company was not likely to achieve growth this year, Hanafi aimed to achieve the same sales figures as 2015. “Achieving equal sales to last year would be more than enough for us.”
Last year, Toto generated revenue of Rp 2.28 trillion, a bounce of 11 percent from 2014. Its domestic sales reached Rp 1.64 trillion, up 5.2 percent from 2014, while overseas sales were Rp 636 billion, up 29.2 percent from 2014.
However, Toto’s profits last year tumbled to Rp 285 billion, falling 3.6 percent from 2014.
Toto Indonesia was established in 1977 by Mardjoeki Atmadiredja, who has acted as president commissioner since 2013. The company produces household goods like sanitary ware, fittings and kitchen systems. Hanafi said the company’s domestic market share was 70 percent, outpacing competitors like Renovo and American Standard.
With its declining business in the first quarter, in order to equal last year’s figure Toto has placed its hopes on a strategy of increasing product prices.
Hanafi said the approach, which was implemented in April, would not be a boomerang that reduced Toto’s sales throughout the year.
“Cutting prices will not increase sales, because the market is stubbornly low now. So we chose the other way — raising the price of most of our products by 7.5 percent,” Toto’s finance director Setia Budi Purwadi said, adding that Toto’s strong presence was also a key point in the strategy.
Despite its flat outlook this year, Toto Indonesia plans to increase production in following years, which is hoped to increase sales. To achieve the long-term target, the company is cooperating with construction material distributor PT Surya Pertiwi Nusantara on building a plant in Surabaya, East Java.
The plant, with an investment of $29 million, is expected to finish construction by June 2017. It will have an annual production capacity of 300,000 products, adding 12 percent to Toto’s production volume every year. Currently the company has three plants located in Tangerang, Banten, with a total capacity of around 2.1 million products annually.
“In the future, this Surabaya plant will also be our main producer, as there is a high possibility of area expansion,” Hanafi added. (adt/dmr)