22% Growth Predicted for GT

Thanks to sustained growth in Indonesia’s automotive sector, one of the country’s leading tyre producers expects to see full-year sales to swell by 22 per cent. Gajah Tunggal’s director, And Catharina Widjaja, told Jakarta-based news sources that demand would continue to be high in the second half of the year, following the near-50 per cent growth in car sales in H1. According to GT, the company’s sales will top 8 trillion rupiahs (about 484 million pounds sterling) for the year; a significant increase on 6.6 trillion rupiahs for 2007.

GT’s president director, Christopher Chan Slew Choong, has backed up these figures, stating that the end-year predictions were in line with the company’s goal of achieving annual sales of 1 billion US dollars (c. 554 million pounds sterling) by 2010. Net sales for H1 2008 were 21 per cent up year-on-year to 3.9 trillion rupiahs (c. 233 million pounds sterling), supporting a net profit of 208 billion rupiahs (12.5 million pounds sterling), up 258 per cent from 58 billion.

With these targets looming large on the horizon, the company is in the process of building new factories. Begun in 2005, the scheduled completion date for both plants is 2010. The first will produce car tyres, increasing GT’s production to 45,000 units a day, from its current figure of 33,400; the second will manufacture motorcycle tyres, more than doubling daily production capacity to 105,000 units, from 50,000.

Additionally, Catharina stated that the company is still considering the timing of the sale of its 28.9 per cent stake in synthetic rubber producer PT Polychem. The sale is inevitable, says Catharina, as the business is not core to GT. The expected price is set at around 25 million US dollars (13.9 million pounds sterling).

Finally, GT revealed that it is planning to refinance its current debt of 465 million US dollars (257 million pounds sterling). The plans, subject to review, look likely to be executed in July 2010, including – among other means – bond issuances.

GT currently holds 62 per cent of the domestic motorcycle tyre market, while it is also maintaining second place in car tyres, with 20 per cent (Bridgestone is the market leader with 43 per cent).