Semen Indonesia may review expansion plans amid slow demand environment

Semen Indonesia has said it may review some planned expansion projects amid sluggish domestic cement demand, according to a senior company executive.

“We will probably be accelerating the projects that have already started construction, but for other projects, like our regional expansion and the packing plant, we may adjust the plans,” said Ahyanizzaman, finance director at Semen Indonesia told the Jakarta Globe.

“Our biggest investments are the Rembang plant and the Indarung plant. We’re racing to get that done on time, because those plans are hampered, we could be seeing a loss,” he added.

Ahyanizzaman did not clarify if Semen Indonesia intends on cutting capex, but said the company, having reviewed its first half performance, expects cement demand to slow for the rest of the year. [Financially], it doesn’t look like the condition in the second half of the year will improve to the way things were last year,” Ahyanizzaman said.

Profit at Semen Indonesia fell by 20 per cent to approximately IDR2.2trn in the six months to the end of June 2015 from IDR2.75trn in the same period last year. Sales fell two per cent to IDR12.6trn during the six-month period, while cost of goods rose by seven per cent to IDR7.6trn. The company also suffered from an 11 per cent increase in financial expenses and a six per cent climb in general expenses to IDR177bn and IDR974bn, respectively.

Nationwide, cement sales fell by 3.3 per cent to 28Mt in the first half of this year, compared to 29Mt in 1H14, data from the Indonesia Cement Association.