Takeaways from Jakarta — AKR presented at Citi's Indonesia Investor Conference on Aug.4-5.Below are key takeaways.
1H10 Results — Akra posted strong 1H revenue growth of 33%y-y to Rp5.2trn.It was mostly underpinned by the increase in petroleum distribution sales at Rp3.0trn (+57%y-y),followed by basic chemicals at Rp948bn (+8%y-y),manufacturing at Rp1.1trn (+13%y-y),and logistics at Rp174bn (+2.6%y-y).Gross profit was down 4%at Rp443.15bn due to the jump in COGS in manufacturing.However,bottom line was still up 27%y-y at
Rp140bn due to forex gains and lower tax as a result of increase in free float.
Petroleum Division — The company delivered total sales volume of 551.903kl in 1H10 (+27%y-y;54%of FY09 total sales at 1,025MKL).It supplied oil mostly to Kalimantan and Sulawesi (54%),Java-Bali (34%),and Sumatra (12%).Higher contribution to revenue was also pushed by the increase in average selling price by 24%to Rp5.496/litre from Rp4.447/litre in the same period last year.
Subsidized fuel — Akra was granted by BPH Migas to distribute diesel fuel of 56,500kl for the first time this year to Bunker,Fisheries and Subsidized Sectors.This volume is much higher compared to Shell,which was only 5,000kl/year,the company said.The market for subsidized petroleum product is currently at 37mkl and is expected to grow 8-9%y-y for this year; hence company sees upside potential for this business.
Future outlook — Petroleum sales are expected to continue to grow with increasing demand for petroleum products in the coal mining sector, especially in Kalimantan.Currently AKR owns total petroleum storage capacity of 509,185kl across Indonesia.With a near peak utilization rate of 80%,it is planning to build four more terminals in Kalimantan and Sumatera with total additional space of 65,000kl for 2010/2011.This would be a part of the allocated capex of US$40-45m for this year.
Basic Chemical — In this division,managed under AKR ’s subsidiary,Sorini Agro Asia Corporindo (SOBI.JK),1H10 sales rose 16%y-y to Rp857bn with sales volume up 23%y-y at 172MT.However,gross margin was down to 19.3%vs.32.5%in 1H09 due to jump in COGS.The price of tapioca starch as a raw material has gone up to US$550/MT (+38%YTD),whereas the selling price of sorbitol went up only by 20%YTD.
Switching to corn starch — To tackle this issue,the company will switch its raw material usage from tapioca to corn starch,which is currently selling lower at US$458/MT.Instead it will export the tapioca starch overseas to take advantage of a higher price.
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