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Semen Baturaja boosts white clay, mortar production in wake of pandemic
The company has made an investment of up to Rp 3 billion and Rp 800 million, respectively, to install white clay and mortar production facilities at its factories.
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Semen Baturaja cement distribution activities are carried out. (Courtesy of/Kalog)
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tate-owned cement producer PT Semen Baturaja plans to continue developing its downstream products, including mortar and white clay, as part of its second half and long-term strategy in the wake of the COVID-19 pandemic.
The company has made an investment of up to Rp 3 billion and Rp 800 million, respectively, to install white clay and mortar production facilities at its factories, the company’s president director, Jobi Triananda Hasjim, has said.
“Our main targets within the next five years are the utilization of existing facilities, securing raw materials and making downstream products key,” Jobi said during a press briefing hosted by the Indonesia Stock Exchange (IDX) on Monday.
The pandemic has depressed spending on infrastructure as the state budget has been reallocated to finance the country’s COVID-19 containment measures, affecting sales of infrastructure materials, including cement.
Read also: Foreign companies go ahead with acquisition plans despite COVID-19 pandemic
During this year's first six months, Semen Baturaja saw its revenue fall 19 percent to Rp 671.83 billion from Rp 833.47 billion during the same period last year. It turned around its Rp 7.56 billion net profit booked in 2020 to a net loss of Rp 137.62 billion as of June 2020.
As many infrastructure projects are funded by the government, basic industry companies such as Semen Baturaja needed to rely on alternative products to increase sales.
Semen Baturaja plans to launch and sell its mortar product under the brand Baturaja Mortar during this year’s second half, following a market trial it conducted several months prior in Bandar Lampung.
It has set aside two production facilities with a capacity of 360 tons and 2,400 tons per year located in Lampung to produce its mortar supply.
At the same time, the company is ramping up its white clay production to achieve the 2020 target of 50,000 tons of white clay.
In a memorandum of understanding signed in January between the company and PT Pupuk Sriwidjaja (Pusri) Palembang, a subsidiary of state-owned fertilizer company PT Pupuk Indonesia, the company agreed to supply white clay to Pusri Palembang.
Read also: Japanese cement firm to spend $220 million for 15% of Semen Indonesia subsidiary
Throughout the first half of the year, the company has sold almost 16,000 tons of white clay, 7 percent higher than the target set for the period.
Aside from mortar and white clay, the company is undergoing research and development for a fiber cement board that can be installed as a wall partition, floor and ceiling. It is also developing a porous concrete product that can be used in parks to increase water absorption into the parks’ soil.
“In the cement industry, the markets [we are expanding to] are dependent on the cost of distribution because the average price of cement across all regions is almost the same,” Semen Baturaja’s finance director, M. Jamil, said during the briefing.
The company has been reliant on sales within the southern part of Sumatra, which includes the provinces of Jambi, South Sumatra, Bangka Belitung Islands, Bengkulu and Lampung.
To increase sales, Semen Baturaja recently expanded to Pontianak in West Kalimantan and has shipped 2,250 tons worth of cement as of July this year to the city, which will act as the company’s entry point to greater Kalimantan’s market. The company plans to enter Riau province soon.
The total demand for cement from the southern Sumatra market fell 5.3 percent year-on-year to 2.41 million tons in the first half of this year from 2.54 million tons in last year’s first half.
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The company reported a downturn in cement production by 17 percent to 744,275 tons, while its sales volume fell 16 percent to 746,612 tons during the same period.
Jamil noted that entering the second half of the year, the company had seen an uptick trend in demand for cement and hoped this could prop up the company’s sales going forward.
The company’s shares, traded on the IDX under the code SMBR, rallied at 2.91 percent by closing on Monday to Rp 530. Throughout the year, the company’s stock price has risen by 20.45 percent.
The company did notably better than the basic industry and chemicals sector, as well as the benchmark Jakarta Composite Index, as the former fell 22.50 percent and the latter 16.23 percent year-to-date.
