Indonesian Wood Furniture Firms in Focus: Integra Indocabinet

The company, with its headquarters in Sidoarjo (East Java), primarily produces indoor and outdoor furniture for homes, offices and hotels as well as wooden doors, wooden window frames and other wooden and rattan-based products.

Integra Indocabinet is eager to expand its market expansion up to Indonesia's capital city of Jakarta on the other side of Java island. In order to achieve this, the company plans to launch new products (including wooden floors and wooden blinds), build new warehouses, establish new distribution points, and enter the retail market.

Wang Sutrisno, Finance Director of Integra Indocabinet, said the new products will be manufactured in the company's factories in Lamongan (wooden floors) and Sidoarjo (wooden blinds). Before the end of the year, the company's wooden floors should become available on the market.

Currently, Integra Indocabinet owns one warehouse in Sidoarjo with a size of one hectare  However, it plans to build two new warehouses to serve the markets in West and East Java: one additional one in Sidoarjo and one in Jakarta.

In the course of 2018 the company also plans to open a new store in the Greater Jakarta region where it targets to sell its products to the middle class and elite segments of society. There are several locations in this region that are suitable, including South Jakarta, Bintaro, Alam Sutera, and Bumi Serpong Damai.

Integra Indocabinet's Thema brand specifically aims at the richer segments of Indonesian society, while its Vittorio brand aims at the middle class-down segments. In the future, Integra Indocabinet wants to establish a franchise model for its Vittorio brand. But before it can launch the franchise model it needs to have the new warehouses so it has plenty of space to store its furniture and other products (the warehouse in the Jakarta region will also be required to store furniture for its soon-to-be-opened Jakarta branch).

But despite the importance of the domestic market, exports are even more vital for the company. During the first half of 2017, around 80 percent of Integra Indocabinet's sales involve exports, particularly to the United States (which contributes 50 percent to the company's total exports), European Union (17 percent), and China (14 percent). Integra Indocabinet now also wants to to add the Middle East, specifically Dubai and the United Arab Emirates, to its export market.

The USA, however, will remain the key focus of the company and therefore Integra Indocabinet also plans to launch a marketing hub specifically for the US market.

Besides furniture and other wood products, Integra Indocabinet also generates revenue from the sale of wood through its subsidiaries: (1) Nakata Rimba which owns a 45-year concession for 41,450 hectares of industrial wood in East Kalimantan, and (2) River Timber which owns a 55-year concession for 97,500 hectares. Sales of wood contribute about 6 percent to Integra Indocabinet's total sales.

Financial Report Integra Indocabinet:

	2016	2017¹	Y/Y Growth
Revenue	1,300	1,700	+30.8%
Gross Profit	141	181	+28.4%

^{in billion IDR
¹ company's target}

Financial Report Integra Indocabinet:

	H1  2017
Total Assets	3,561.4
Total Liabilities	1,727.3
Total Equity	1,834.0
Revenue	846.2
Gross Profit	274.1
Operating Income	184.8
Net Profit	90.7
ROA (%)	2.55
ROE (%)	4.95

^{in billion IDR, unless otherwise stated
Source: Kontan}

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