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Lautan Luas expects trade war to boost exports to US
A publicly listed chemical company, PT Lautan Luas Tbk
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span>A publicly listed chemical company, PT Lautan Luas Tbk. (LTLS), says it hopes it would be able to take advantage of the escalating trade war between the United States and China to boost its exports, especially to the US.
The increase of import tariffs imposed by the US on Chinese goods would encourage American companies to source raw materials from other countries. This would offer an opportunity for Lautan Luas and similar companies from other emerging countries to boost their exports.
“With higher import tariffs on Chinese goods, the United States will look for other sources of goods from other countries, especially in Southeast Asia and specifically Indonesia,” the company’s operational director, Herman Santoso, said on Thursday following the company’s annual shareholder meeting.
In the meeting, the shareholders agreed to allocate 30 percent of last year’s net profits for dividends.
Lautan Luas, a major integrated chemical company, has 17 manufacturing facilities, which include 14 factories in Indonesia, two in China and one other in Vietnam.
The high tariffs imposed by the US had dealt a major blow to the company’s operations in China, as they make its chemical products too expensive for US industries, he said. Only about 20 percent of the company’s production is exported.
Herman Santoso said that the company’s revenues were projected to increase by about 10 percent to about Rp 8 trillion (US$559.44 million) this year.
“Our most interesting finding is that our supply chain logistics is one our fastest-growing businesses, but we are equally optimistic about our main manufacturing and distribution facilities,” Herman said.
PT Lautan Luas has been in the business since 1995, offering basic chemical and laboratory services to clients in the leather, paper, textiles, water processing and electroplating industries.
Since its founding, the company has expanded into an integrated business logistics and supply chain business, as well as technology-driven solutions and water-processing facilities.
The sluggish economy has affected the company’s profitability. In the first quarter, its net profits fell by 4.7 percent to Rp 48.23 billion from Rp 50.65 billion in the same period in the previous year.
The company estimated its total net profits would stagnate at about Rp 200 billion. In 2018, the company booked net profits of Rp 200.33 billion, up 34.5 percent from Rp 149.89 billion in 2017.
The company has yet to undertake any major expansions this year, Herman said, adding that $10 million would be allocated from its internal funds and bank loans to buy new machines for their manufacturing facility in Surabaya, Central Java.
