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Jakarta Post

Sluggish car sales, weaker commodity prices slash Astra’s profit by 7 percent

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Fri, November 1, 2019   /   11:22 am
Sluggish car sales, weaker commodity prices slash Astra’s profit by 7 percent Sluggish car sales have adversely affected Astra International's financial performance in the January-September period. (Antara/Raisan Al Farisi)

Sluggish car sales throughout the year coupled with weakening commodity prices have taken a toll on diversified conglomerate PT Astra International.

The publicly listed company’s profit was down 7 percent year-on-year (yoy) to Rp 15.87 trillion (US$1.14 billion) in the January to September period of this year.  

"The decline in profit was caused by decreasing contribution from the automotive and agribusiness lines, which weakened deeper than the increase booked by the financial services business line," Astra’s president director, Prijono Sugiarto, said in a statement on Thursday.

Although the firm saw a 4 percent increase in motorcycle sales and a 24 percent growth in profit from its automotive parts subsidiary, PT Astra Otoparts, during the nine-month period of this year, Astra’s automotive business segment’s profit dwindled to Rp 6.1 trillion, down 14 percent, due to slumping domestic car sales.

According to the Association of Indonesian Car Manufacturers’ (Gaikindo) latest data, 753,600 cars had been sold as of the third quarter of this year, plunging 12 percent yoy.

Weakening coal and crude palm oil (CPO) prices since the beginning of this year also hit Astra's other business segment, mining and agribusiness, hard. During the nine-month period, Astra’s heavy equipment, mining, construction and energy business segment saw a 5 percent decline in profit, while the agribusiness segment’s profit plummeted 90 percent yoy.

In the meantime, the company’s information technology and property business profit slumped 28 percent and 38 percent, respectively.

Amid the gloomy performance of almost all its business lines, the company still had a glimmer of hope from its financial services as it booked a 25 percent increase in profit to Rp 4.31 trillion as of the end of September this year.

As a result of the less than stellar performances from multiple business lines, the company only managed to book Rp 177.04 trillion in revenue, up just 1 percent from the same period last year.

For the rest of the year, the company pinned its hope on increasing contributions from its financial services business and from its newly-acquired gold mine, Prijono said.

“In the meantime, we still need to keep an eye on weak domestic spending and lower commodity prices,” he said.