Tuesday, July 31, 2012

Net profit Gajah Tunggal increase 25%

PT Gajah Tunggal Tbk scooped IDR526 billion net profit, increased 25% compared to the same period of that last year as driven by realized profit on the investment and cancellation of provision for doubtful accounts because the company receives payment for the debt.

Gajah Tunggal Director Catharina Widjaja said both issues eliminated the losses due to the weakening rupiah exchange rate against the U.S. dollar which arise dure to debt in foreign currencies.

"In the second quarter of 2012, we completed the purchase of nearly 100 hectares land for US$108 million located in the new industrial area in Karawang. The purchasing has two objectives, a portion of the land will be used for the construction of tires proving ground which will begin in the coming months and is expected to be completed within 2 years to 3 years," he explained on Tuesday (07/31/2012).

Furthermore, she said, the others will be used for Gajah Tunggal manufacturing locations expansion. "This land purchase is financed with internal resources and requires no external funding."

He explained the management has decided to start commercial production of radial tires for trucks and buses. "The radial tires production for trucks and buses will be carried out gradually over the next 3 years with a total production capacity target of about 1,500 – 2,000 tires per day. Total capital expenditures for this program is expected to reach US$150 million over 3 years period”

Catharina said Gajah Tunggal net sales in the first half of 2012 increased 9.4% to IDR6.36 trillion, compared with same period last year which amounted to IDR5.81 trillion.

In addition, she said, four-wheeled original equipment manufacturer (OEM) market also increased due to increasing demand from manufacturers who have teamed up with GT. On the contrary in two-wheeler OEM market, delivery to Michelin and export to Europe decreased.

"Gross profit margin in the first half of 2012 increased to 17.4% from 13.2% in the same period of last year due to significant decrease in natural rubber price. The quarterly gross profit margin in the second quarter of 2012 was quite stable due to the high cost of chemical materials [related to the oil price] used by Gajah Tunggal."

She also said the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) during the first semester 2012 reached US$104 million, up 43% compared with same period a year earlier.

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