Gajah Tunggal Sales Up on Back of Increased Michelin Orders

“Tyre demand in the domestic market is also increasing this year,” stated Gajah Tunggal director Catharina Widjaja on August 22. Mrs Widjaja said operating profit is expected to rise by approximately 60 per cent to IDR500-600 billion (£26.8-32.1 million) in 2007 while EBITDA is projected at US$95 million, increasing about 35 per cent over 2006. She added that orders received from Michelin will climb in the next three years, to 2.7 million in 2008, four million in 2009 and five million in 2010. However the director would not be drawn into speculating about the total value of these Michelin orders. “Michelin is committed to the volumes instead of the prices. But assuming the current prices the total value is approximately US$15 million.”

To anticipate an increase in orders over the next three years, Mrs Widjaja said that Gajah Tunggal has allocated a capital expenditure of $170 million to increase production capacity. This capex will be financed by the proceeds of bonds issued in 2005; these have a value of $325 million, and have also been used to repay debt – Mrs Widjaja stated that $120 million had been allocated for this purpose.