Indocement revenue down but profit stable

Indocement Tunggal Prakarsa (Indocement) saw its year-on-year revenue fall nearly 10% (-9.91%) to IDR 3.73 trillion (US$246.12 million) in the first quarter of 2020.
Quarry Products / July 7, 2020
By Guy Woodford
A cement factory on a cliff next to The Indian Ocean in Banten Bay, Java, Indonesia pic: Edgras Sarkus ID 179388699

The major Indonesia-based cement firm’s profit for the quarter was IDR 400.43 billion ($27.52 million), up 0.88% from the same quarter in 2019.

Sales of cement to related parties were at IDR 30.07bn ($2.06 million) down 27.29% from a year ago while sales to third parties were at IDR 3.04tn ($208.96 million), a drop of 8.42% from a year earlier. Indocment’s sales of pre-mixed concrete were at IDR 291.67bn ($20.04 million), a year-on-year decline of 20.1%. The company’s sales of aggregate dropped by 92.02% to IDR 172 million ($11,823). Finally, Indocement’s cost of goods decreased by 10.54% to IDR 2.29 trillion ($157.41 million).

As of 31 December 2019, Indocement, whose majority shareholder is German building materials giant HeidelbergCement, had six subsidiaries through direct ownership and 22 subsidiaries through indirect ownership involved in several businesses related to the production and sale of cement, ready-mixed concrete (RMC), aggregates, and trass.

Today, Indocement operates three factories, which together host 13 plants with a total annual production capacity of 24.9 million tons of cement. Ten plants are located in Citeureup Factory, Bogor, West Java; two plants in Palimanan Factory, Cirebon, West Java; and one plant in Tarjun Factory, Kotabaru, South Kalimantan. The Citeureup Factory is now one of the largest integrated cement plant complexes in the world. To support its business and distribution network, Indocement owns eight cement terminals and 42 batching plants. In 2019, to reduce distribution costs, Indocement opened new cement terminals in Lampung and Palembang, one of which is to supply cement for the construction of the Trans-Sumatra toll road.

To strengthen its aggregates business and secure the supply of good quality aggregates for its ready-mixed concrete business, in early 2019 Indocement started building a 2.5 million tons a year aggregates processing site on greenfield land in Pamoyanan, West Java. The new aggregate quarry was due to begin operating in Q2 2020.

In response to the ready-mixed concrete business climate, Indocement last year shifted its focus to a more specialised market segment targeting industrial consumer segment which required concrete with high-quality standards, such as the construction of power plants and high-rise buildings and initiated the marketing of slag cement by using consultative selling method as well. The product can be tailored to the customer’s needs. This initiative is said to have yielded positive results with the slag cement used for a big port construction project in Patimban, West Java.