Astra International Targets to Raise Market Share
Astra International, one of the biggest companies that is listed on the Indonesia Stock Exchange (in terms of market capitalization), targets to boost its market share in Indonesia's automotive industry to 50 percent before the end of the year.
Prijono Sugiarto, President Director of Astra International, said the company controlled 48 percent of total domestic car sales in Indonesia in the January-June 2018 period. On a monthly basis the figure fell to a low of 46 percent in June 2018. Both figures are far below the average of 55 percent that was recorded in the first half of 2017 and therefore reveal the need for Astra International to enhance its business operations in the automotive industry. This is particularly important in present times as competition is fierce and rising.
Although Astra International is among the biggest diversified conglomerates in Indonesia, nearly half of the company's total net profit originates from the automotive sector, followed by heavy equipment, mining, construction & energy (32 percent), financial services (21 percent), and agribusiness (6 percent).
Starting from July 2018 Astra International's production capacity of Rush and Terios vehicles rose to 13,000 units per year (from 7,000 units previously). Meanwhile, 3,000 of the units will be set aside for export purposes.
Rising production capacity is believed to have contributed to Astra International's improving car sales in July 2018. That month the company sold 54,867 vehicles, or 51 percent of total domestic car sales in Indonesia (107,431 units).
Sugiarto added that car engines that are manufactured by Astra International are ready for the Indonesian government's expanded B20 biodiesel program. This expanded program orders all sectors to use biodiesel that has a 20 percent bio content. Key aim of this program is to limit imports of fuel.
Indonesia was once a big crude oil producer and exporter (and a member of the Organization of the Petroleum Exporting Countries, or OPEC) with output touching over 1.6 million barrels per day (bpd) in 1995. However, due to declining investment in oil exploration (partly caused by the country's notorious regulatory uncertainty) in combination with rising domestic fuel demand Indonesia became a net oil importer, thus putting pressure on the rupiah exchange rate.
Meanwhile, Astra International subsidiary United Tractors, a heavy equipment distributor, plans to acquire a 95 percent stake in the Martabe gold mine in North Sumatra from Singapore-based Agincourt Resources, a deal that is worth USD $1.14 billion. United Tractors' Chief Financial Officer Iwan Hadiantoro expects the deal, which will be financed using United Tractors' internal cash reserves, to be completed in the next four of five months.
