Better Times Ahead for Indonesian Steel Producer Krakatau Steel?
State-controlled steel manufacturing company Krakatau Steel is optimistic that it will post net profit in 2018 after continuously being plagued by net losses since 2011. Tambok Setyawati, Finance Director at Krakatau Steel, said the company targets USD $24 million in net profit for 2018. This optimistic view is supported by its significantly declining net loss in 2017.
According to the unaudited financial results, Krakatau Steel posted a IDR 1.17 trillion (approx. USD $88 million) loss in full-year 2017, significantly down from a net loss of USD $171.7 million in the preceding year or the USD $320 million loss in 2014.
Setiawati said this improving performance is the result of sliding operational costs, rising sales volumes, and the improving steel price. In 2018 Krakatau Steel targets to see a 40 percent year-on-year (y/y) increase in sales to 2.8 million tons.
The company's rising sales are supported by climbing domestic demand in Southeast Asia's largest economy. Domestic demand in Indonesia climbs by about one million tons per year. In 2016 Indonesia consumed 12.7 million tons of steel. This figure is estimated to have grown to 13.6 million tons in 2017 (we are still waiting for the official data).
Read also: Investment in Indonesia: Great Opportunities for Steel Producers
The improving outlook for the company has had a positive effect on the share price of Krakatau Steel. Its shares rose 0.98 percent to IDR 515 a piece on Wednesday (31/01). Meanwhile, so far this year, the company's shares have surged 21.46 percent.
Stock Quote Krakatau Steel - KRAS: