JAKARTA. Indonesia’s largest cement maker PT Semen Indonesia (SMGR) is planning to boost its capital expenditure (capex) to between Rp 7 trillion (US$552.1 million) and Rp 9 trillion this year for new plants, upgrades and possible international expansion.
SMGR finance director Ahyanizzaman said on Tuesday that the total budget was an increase of around
Rp 3 trillion from last year’s capex.
He explained that his firm would allocate around Rp 1 trillion to Rp 2 trillion to upgrade its packing plants and around Rp 2 trillion for possible overseas expansion this year.
“In addition, we will spend about Rp 5 trillion on the construction of new plants in Rembang, Central Java, and Indarung, West Sumatra,” he told The Jakarta Post.
The new plant in Indarung was expected to start operating in the first half of next year, while the plant in Rembang was expected to begin operations by the end of next year, Ahyanizzaman explained.
The two plants would add 6 million tons per year to the firm’s current annual output of around 31.8 million tons, he said.
He further revealed that the company would use internal cash and a number of existing loans to finance the majority of its capex this year.
As of September last year, state-owned SMGR had a total of Rp 3.6 trillion in cash and cash equivalent.
The firm also pocketed Rp 1.4 trillion in syndicated loans from state lender Bank Mandiri to finance the construction of its new plant in Rembang. The loan, which was obtained in March last year, will mature in 42 months.
The firm also obtained a Rp 1.9 trillion-credit facility in May last year, maturing in eight years, to finance the construction of the Indarung plant.
SMGR would possibly seek another source of funds, such as bonds, for its international expansion this year, Ahyanizzaman said.
“We have completed the due diligence process with a number of potential investors in one or two Southeast Asian countries. We hope that we can eventually have a presence in those countries,” he went on, declining to disclose the names of the countries.
Besides Indonesia, SMGR currently operates in Vietnam through its subsidiary Thang Long Cement Vietnam. The firm has previously told reporters that it was looking into neighboring countries such as Myanmar and Bangladesh for future expansion.
In another development, Ahyanizzaman estimated that his firm would pocket a 10 percent-increase in revenues and between 3 and 6 percent in net profit in 2014 from Rp 24.5 trillion and Rp 5.37 trillion in the previous year, respectively.
Ahyanizzaman was upbeat that his firm would be able to outperform projected industry growth of around 5 to 6 percent this year, driven by more a stable political and economic situation following last year’s elections.
He said, however, that his firm would likely see increasing operational costs this year if the rupiah continued to weaken.
Around 9 to 10 percent of SMGR’s operational costs this year would be for importing materials such as gypsum, spare parts and cement packs, he explained.
SMGR’s shares dropped by 1.85 percent to Rp 15,925 per piece at Tuesday’s close from Rp 16,225 a piece at previous closing, as the broader Jakarta Composite Index (JCI) lost almost 1 percent to 5,169 during the day. (Khoirul Amin)
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