Gajah Tunggal 2010 sales up 24% – Deutsche Bank

Indonesia’s PT Gajah Tunggal Tbk is expected to report its fiscal year 2010 results on March 26, 2011. Pre-empting the full release of the company’s financials, DB Equity Research Automotive reports the tyre maker achieved annual sales of Rp 9.9 trillion (£693.6 million), a 24 per cent year-on-year increase. This figure is, the Deutsche Bank analysts comment, three per cent above consensus and five per cent above Deutsche Bank estimates. Gross profit is reported to have increased six per cent year-on-year above 2009’s Rp 1.821 trillion (£127.6 million), implying a full-year gross margin of 17.9 per cent. This margin is, DB Equity Research Automotive notes, “much better than expected” given the steep (around 16 per cent) average increase in natural rubber prices in the fourth quarter of 2010 versus the average in the first nine months of the year.

Operating profit is said to have increased 12 per cent year-on-year from its 2009 level of Rp 1.144 trillion (£80.1 million), giving an operating margin of 13.1 per cent. Net profit, which rocketed up to Rp 905.33 billion (£63.4 million) in 2009, is reported to have declined eight per cent year-on-year in 2010, mainly due to FX gain effects. Net profit is 19 per cent above the bank’s own estimate but four per cent below consensus. DB adds that, excluding FX gains, net profit rose 34 per cent year-on-year.

Deutsche Bank refers to Gajah Tunggal’s performance as “solid FY10 results,” and notes that a contraction in margins in the first quarter of 2011 should be expected.