Gajah Tunggal profit grows 35% in first quarter

Indonesia’s Gajah Tunggal has reported a net profit of Rp 332 billion (£23.4 million) in the first quarter of 2011, a 35 per cent year-on-year and 182 per cent quarter-on-quarter increase. This result is “well above” Deutsche Bank’s consensus (the bank’s equity research analysts comments that it is equal to 40 per cent of consensus and 43 per cent of its full year 2011 forecast). Much of this growth was, however, from foreign exchange gains and associates. Core net profit, excluding foreign exchange and associates, was Rp 181 billion (£12.8 million) – relatively unchanged from the first quarter of 2010 and a quarter-on-quarter increase of 60 per cent.

Sales during the quarter amounted to Rp 2.9 trillion (£204.6 million) and represent a 25 per cent year-on- increase and 23 per cent of Deutsche Bank’s full year estimate. Margins were adversely impacted during the quarter by higher natural rubber prices, however Deutsche Bank analysts maintain that its forecast full year 2011 gross margin of 15.7 per cent “seems conservative” as the tyre maker’s own price increases have been higher than expected and rubber prices have recently started to ease. According to Deutsche Bank, “robust product demand should also support a swift margin recovery over the next quarters.”