New Astra boss plans big spending to sustain growth

(News Terupdate) - Newly appointed publicly listed PT Astra International boss plans to spend up to Rp 8 trillion (about US$864 million) in new investments this year to sustain the growth of the country’s largest conglomerate.

Astra International president director Prijono Sugiarto said Monday the company planned to spend 10 percent of 2010 capital expenditures on expansion projects in its car and motorcycle producing units.

“Our consolidated capital expenditures in all Astra subsidiaries may reach between Rp 7.5 trillion and Rp 8 trillion this year,” he told reporters following his election as president director of this widely diversified business group.

“Of that number, 10 percent will be spent on expansion of [Astra] automotive firm networks.”
Prijono who has been acting president director following the death of the previous incumbent Michael Ruslim in January, was officially designated as president director during the company’s extraordinary shareholders meeting on Monday.

The capital expenditure, he said, would also be allocated for expansion projects in other Astra business areas, mainly in mining.

The company’s consolidated expenditure totaled Rp 5 trillion last year, he said.

According to Prijono, the company will maintain its core business in the automotive sector, with 47 percent of Astra International’s revenues generated from its car and motorcycle production firms and 15 percent from its automotive-related financing firms in 2009.

Astra International’s revenue slightly increased to nearly Rp 98.53 trillion in 2009, from Rp 97.06 trillion in 2008. The company’s net profit rose by 9 percent to Rp 10.04 trillion 2009 from Rp 9.19 trillion recorded in the previous year.

Vice president director of Astra International’s car producing subsidiary PT Astra Daihatsu Motor, said Daihatsu planned to boost its production capacity from 211,000 cars a year to 286,000 a year “in the near future”.

“Astra [International] will spend a total of Rp 250 billion on expansion projects in Daihatsu and [another Astra International car producing subsidiary] Toyota [Astra Motor], with financing coming from Daihatsu,” he said.

He said that the new investments would partly be used to purchase painting, assembling and welding equipment.

Another Astra International director and also Toyota president director Johnny Darmawan Danusasmita said total car sales were expected to grow by 10 percent this year on the back of economic recovery.

According to the Indonesian Automotive Industry Association (Gaikindo) data, car sales had fallen from 607,805 units in 2008 to 486,061 units in 2009. Astra cars — Daihatsu, Isuzu, Nissan Diesel, Toyota and Peugeot — controlled 52 percent and 58 percent of the market in 2008 and 2009, respectively.

The data also showed that monthly car sales reached 52,806 in January, a 67 percent surge from 31,624 cars in the same month last year.

Sudirman also said Astra International’s motorcycle producing subsidiary PT Astra Honda Motor planned to increase its installed capacity from 3 million units per annum to 3.5 million.

Prijono said around $30 million would be spent on Honda’s expansion plan. Indonesia’s motorcycle sales totaled 5.85 million motorbikes in 2009, slightly down from 6.22 million in 2008. Honda has a share of nearly 50 percent in the motorcycle market.

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