Indonesian companies are striving to utilize a window of opportunity to raise funds on better terms that has opened after Standard & Poor's long-awaited upgrade of the country's credit rating to investment grade. (Photo courtesy of Astra International)

Astra's '16 Profit Up on Bigger Auto Market Share, Improving Commodity Prices

BY : SARAH YUNIARNI

FEBRUARY 28, 2017

Jakarta. Indonesian diversified conglomerate Astra International booked a 4.8 percent increase in net income last year, as rising car sales and improving global commodity prices made up for a slump in the company's bank and heavy machinery businesses.

Astra booked Rp 15.2 trillion ($1.1 billion) in net income last year, up from Rp 14.5 trillion in 2015. Revenue, however, fell by 2 percent to Rp 181.1 trillion.

"The Astra Group's performance in 2016 was quite satisfying, thanks to a stable business growth," Prijono Sugiarto, the president director of Astra said in a statement on Monday (27/02). 

"Prospects are positive this year, thanks to expected improvement in economic conditions and improving coal price in the international market," he added.

Auto business still the backbone

Most of Astra's net income comes from its automotive business unit, still its backbone after many years. Net income from this unit went up 23 percent to Rp 9.2 trillion last year.

Astra is the country's biggest car distributor and last year posted a 16 percent increase in car sales to 591,000 units, which boosted the company's market share to 56 percent by the end of last year from 50 percent in 2015.

The conglomerate introduced at least 14 new car models and nine revamped models throughout last year. Indonesia saw its total car sales rose 5 percent to 1.1 million units in 2016.

Astra Otoparts, the conglomerate's auto parts maker, booked a 31 percent increase in net income to Rp 418 billion last year.

Astra's sales figure for motorcycles meanwhile fell 2 percent last year to 4.4 million units. But the company claimed its market share actually grew to 74 percent from 69 percent in 2015, at a time when the country posted an 8 percent decline in sales of motorcycles nationwide to 5.9 million units.

Commodity thrives thanks to palm oil

The company's agribusiness division saw its net income jump a whopping 225 percent to Rp 1.6 trillion. Most of it came from subsidiary Astra Agro Lestari, whose income jumped 223 percent to Rp 2 trillion thanks to improving global crude palm oil price.

United Tractors, Astra's heavy equipment subsidiary, still booked a profit but at Rp 5 trillion it was 22 percent lower than profit in 2015 as the unit was forced to cope with exchange rate losses and lower coal prices.

Banks struggle

Astra's net income from its financial businesses plunged 78 percent to Rp 789 billion, dragged down by poor performance of its commercial lender subsidiary Bank Permata.

Bank Permata booked Rp 6.5 trillion in net losses last year, a huge swing down from a profit of Rp 247 billion in 2015. Higher non-performing loans (NPL) — mostly loans in manufacturing, trading, transport and telecommunication sectors — has been attributed with the downturn.

Astra's automotive financing firms Federal International Finance, Toyota Astra Financial Services and Asuransi Astra Buana were in the black, but still could not offset Bank Permata's slump.

Other units steady

Astra's infrastructure and logistics units performed well, posting a 35 percent increase in net income thanks to increased traffic in its toll road and sales from its drinking water utility firm PAM Lyonnaise Jaya. 

Net income at Astra's new property companies fell by more than a half in line with limited revaluation gain from its ongoing office and apartments projects in South and East Jakarta.

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