PT Indocement, Indonesia's second largest cement producer, has delivered a poor performance report amid fierce industry competition and falling cement prices . Profit fell 53.8% to $37.5 million for the first time in 2017, although revenue fell only 14.1% to $248 million.
Christian Kartawijaya, president of PT Indocement, believes that competition in Indonesia's domestic market is fierce because other producers often sell cement at lower prices. "In the fierce competitive environment, the decline in profits is inevitable, which also shows that the cake of Indonesian cement is getting smaller and smaller, so we have experienced a decline in profits and revenue."
PT Indocement's report also highlighted the oversupply of cement in Indonesia, where demand is estimated to rise by only 5% to 65 million tons this year. Christine added: "Compared with the same period in January-March last year, cement prices fell by 12% in January-March 2017. As long as there is oversupply, we will inevitably have a price war."
Although not optimistic about the Indonesian cement market this year, the company still reserved $128 million for expansion, but the amount was 5.9% lower than same period in 2016. It is mainly used for the construction of cement transfer stations and packaging plants in Sumatra and other areas. PT Indocement said it would go ahead with construction of a cement factory in the Pati region of Central Java province.
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