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Indocement posts higher sales volume in 1H14

World Cement,

PT Indocement Tunggal Prakarsa Tbk. has posted domestic sales volume of 8.97 million t in 1H14, 3% higher than the 8.73 million tons sold in 1H13.

Sales however were slightly lower than the national domestic cement demand that has increased by 4%; thus the company’s market share declined from 30.9% in 1H13 to 30.5% in 1H14.

Export sales volume of cement was 7% higher in 1H14 at 36 000 t, compared to 34 000 t in 1H13. Clinker export decreased by 85% y/y from 44 000 t to 7000 t. Indocement’s total sales volume in 1H14 increased by 2% to 9.01 million t (1H13: 8.8 million t).

In line with the company’s plan to reorganise its aggregate business, Indocement decided to sell its 51% ownership of shares in PT Gunung Tua Mandiri.

Financial results

The company’s net revenues increased by 6.5% to Rp.9498.59 billion, largely supported by higher domestic sales prices compared to 2013.

Operating expenses increased by 18.5% to Rp.1503.2 billion in 1H14, mainly due to higher logistic costs thanks to the impact of higher sales volume and increase of distribution traffic.

EBITDA decreased by 5.8% to Rp.3202.19 billion. However, due to strong cash position, the company’s financial income increased by 83% to Rp.433.17 billion.

Expansion capacity

Indocement believes that domestic demand will continue to grow in the medium term, as infrastructure continues to be built, followed by other property developments. This will trigger a “snowball effect” for domestic consumption.

In anticipation of the strong domestic demand, the company has already completed the construction of a new cement grinding facility with a capacity of 4.4 million tpa, which is expected to be ready by 4Q14.

Indocement is additionally in the process of carrying out final studies for the construction of two new greenfield cement factories, each with a production capacity of at least 2.5 million tpa. One of these factories will be located in Central Java; the other in North Sumatra.

Adapted from press release by Katie Woodward

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