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Pan Brothers to lower PPE production, export next year as vaccines developed

Pan Brothers produces between 3 million and 5 million PPE products per year, but has a capacity of up to 10 million.

Dzulfiqar Fathur Rahman (The Jakarta Post)
Jakarta
Fri, December 4, 2020

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Pan Brothers to lower PPE production, export next year as vaccines developed A medical worker wearing a protective suit stands in the lobby of Rome's Sheraton Parco de Medici hotel on Nov. 9, 2020. (AFP/Andreas SOLARO )

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ublicly listed garment company PT Pan Brothers is planning to lower its personal protective equipment (PPE) and mask production and exports in 2021 as countries around the world gear up to roll out COVID-19 vaccines.

Vice president director Anne Patricia Sutanto said Thursday PPE and mask exports in 2021 were expected to reach only between 30 and 40 percent of this year’s exports.

“For next year, we are projecting PPE export and production to be far lower than this year,” Anne said in a virtual briefing on Thursday.

“We all know here that vaccines will be rolled out. During the transition of vaccination across Indonesia or across the world, the demand for PPE and masks may still exist but the quantity will definitely be smaller than this year.”

The United Kingdom on Wednesday became the first western country to approve Pfizer-BioNTech's COVID-19 vaccine for general use as infections soared around the world.

Read also: Uncontrolled pandemic haunts Indonesia’s manufacturing expansion

Indonesia, on the other hand, is still waiting for the efficacy data from the phase three clinical trial of the COVID-19 vaccine produced by Beijing-based biopharmaceutical company Sinovac Biotech. However, the Food and Drug Monitoring Agency (BPOM) is poised to grant an emergency use authorization even before the clinical trial is finished.

With mobility restrictions in place, the COVID-19 pandemic caused the textile and apparel industry to contract 9.32 percent in the July–September period compared to the same period last year, according to data from Statistics Indonesia (BPS).

“For 2020, our sales to global brands or exports were not as bad as people imagined,” said Anne. “This is because our sales to the global brands stayed roughly the same as last year and some increases were driven by our supplies of PPE and masks.”

Pan Brothers produces between 3 million and 5 million PPE products per year, but has a capacity of up to 10 million.

After the Trade Ministry issued in June a regulation allowing exports of PPE, the garment manufacturer has started exporting its PPE products.

Anne said in August the company would export PPE to markets such as the United States, Canada, France, Italy, Singapore and South Africa.

For overall exports, the company recorded US$319.3 million worth of exports to Asia, $119.5 million to the US and $72.3 million to Europe, according to a news release published on Thursday by the company.

With lower production, Anne roughly estimated the contribution of PPE products to the company’s sales to fall below 5 percent next year. But the company is planning to raise its annual garment production capacity to 130 million in 2021 from 117 million this year, reads the news release.

The company is also expecting to have five additional buyers to place orders next year, according to Anne.

“For next year, [...] the [sales] growth will be about 10 percent or at best 15 percent,” said Anne.

Read also: Offline retail still necessary amid e-commerce boom: Business

Pan Brothers booked a 6.5 percent year-on-year (yoy) increase in sales to $523.8 million as of September. Sales are expected to also rise by between 10 and 15 percent this year from 2019.

The company’s net profit stood at $20.59 million, around 32.5 percent higher than the same period last year, according to the company’s financial report.

The garment manufacturer is also planning to issue next year $350 million worth of global bonds to be listed at the Singapore Exchange Securities Trading Limited (SGX-ST). The company wants to use the money to refinance its $138.5 million syndicated loan and $171 million global bonds.

“The extraordinary shareholders meeting is scheduled to take place on Jan. 6, 2021. If everything goes as planned, from then onward, we can issue global bonds within the next year with a mandate from the shareholders,” said Anne.

Pan Brothers, listed on the Indonesia Stock Exchange (IDX) under the code PBRX, saw its shares jump 4.63 percent as of 12:15 p.m. Jakarta time on Friday as the main gauge, the Jakarta Composite Index (JCI), slipped 0.38 percent. The stocks have lost 55.69 percent of their value so far this year.

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