Solusi Bangun Indonesia reviews its capex after challenging 2Q20

Semen Indonesia-owned Solusi Bangun Indonesia (SBI) is reviewing its capital expenditure plans for 2020 due to the coronavirus pandemic, according to Bisnis.

"The current conditions are still very dynamic, which depends on the corona virus which is still ongoing. Many government projects, such as from the Ministry of Public Works and Public Housing (PUPR), have not been running because of it " the company’s President Director, Aulia Mulki Oemar, said.

While the company had prepared a IDR500bn (US$34.6m) capex plan for this year and in the first half-year had invested around IDR150bn of this total in various projects.

At present, the company had not yet decided whether to cancel the investment plans or reduce them. "The budget we prepared this year will not necessarily be used in full. Because the cash position must be very guarded for the operational interests of the company", Mr Oemar said. He added that the first half of the year had been challenging for the company due to the coronavirus outbreak, high rainfall, Ramadan and Eid Ul Fitr, which had affected sales volumes, particularly in May 2020. However, sales in June had shown signs of recovery.

In the 1Q20 SBI posted a revenue of IDR2.46trn, up 4.9 per cent YoY, and driven by cement sales. Cement sales in the first quarter increased 9.5 per cent YoY to INR2.24trn, despite a 4.7 per cent domestic market contraction in January-March. Cement and slag sales volumes of 2.84Mt were reported in the 1Q20.

While SBI would continue to prioritise domestic sales, it is looking to enter new export markets, particularly the Americas, to support its revenue and profits. “Exports can be a driver of the company’s financial performance when domestic demand is under pressure,” said SBI Director Lilik Unggul Raharjo. Currently exports of cement, slag and other materials are delivered to Bangladesh, China and the Philippines.