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Cheaper products eat at United Tractors' market share
Publicly listed heavy equipment distributor United Tractors reported a significant drop in net profit during the first nine months of the year, attributing the weak performance to customers’ shift to cheaper products and the sluggish economy.
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Giant hand: A backhoe loads coal onto a heavy-duty truck at Adaro Energy's site in Kalimantan. (Courtesy of http://www.adaro.com//-)
Publicly listed heavy equipment distributor United Tractors reported a significant drop in net profit during the first nine months of the year, attributing the weak performance to customers’ shift to cheaper products and the sluggish economy.
Finance director Iwan Hadiantoro said the company saw its profit decline by 43.9 percent to Rp 3.13 trillion (US$238.93 million) in the January-September period compared to the corresponding period last year. He pointed to the decline in heavy equipment sales and lower revenue from its mining services business as the main contributors to the drop.
"We are playing in the premium segment and in hard time like this, customers shift to cheaper competitor," he told reporters on Friday.
Iwan said Korean and Chinese heavy equipment makers had become the main competitors for the company, a subsidiary of diversified conglomerate Astra International. United Tractors’ best-selling heavy equipment brand, Komatsu, saw its market share drop by 30 basis points (bps) to 33 percent during the first nine months of this year compared to the same period last year.
To escape the sluggish mining sector, the company expanded its operations to the construction sector in mid-2015. The contribution of the new sector remains small, with 3.81 percent of total revenue, but double-digit growth was very likely in the immediate future, Iwan said. (hwa)
