Astra’s Earnings Rise in Fourth Quarter on Low-Cost Car Boost

PT Astra International (ASII), Indonesia’s biggest automotive retailer, reported a 25 percent gain in fourth-quarter earnings as the introduction of low-cost cars boosted sales.

Net income in the three months ended Dec. 31 rose to 5.94 trillion rupiah from 4.75 trillion in the previous year, exceeding the average estimate of 5.32 trillion in a Bloomberg News survey of analysts. The quarterly figure was derived from full-year results that the company announced today.

Astra, which distributes Toyota Motor Corp. (7203) cars and Honda Motor Co. motorcycles, posted a 12 percent increase in sales of its own cars in the final quarter of 2013, more than the 8.2 percent average for the full year, data from its website show. Its heavy equipment, mining and plantation subsidiaries made up about 23 percent of annual sales, it said.

“Astra launched a new LCGC product in September, which boosted sales volume last quarter as it was helped by tax cuts,” Robertus Yanuar Hardy, an analyst at PT Batavia Prosperindo Sekuritas, said of so-called low-cost green cars. “This type of car should continue to be popular, but it’s hard to tell whether it will continue to be good for Astra’s earnings as the margin for this product is much smaller than for other models.”

Fourth-quarter revenue climbed to 52.1 trillion rupiah from 44.9 trillion in the same period in 2012. Indonesia’s government provided tax breaks and incentives to manufacturers of small, fuel-efficient cars assembled locally. Astra plans to control a 40 percent share of the low-cost green car market, Toto Suryana Wijaya, the chief operating officer of Daihatsu sales operation at Astra International, said on Sept. 9.

Business Recovery

Astra, the largest company on the Jakarta Composite Index by market capitalization, may boost earnings to 20.4 trillion rupiah this year from 19.4 trillion, according to analyst estimates compiled by Bloomberg. Car and motorcycle sales will expand by 6 percent to 7 percent in 2014, while Astra’s agriculture unit, PT Astra Agro Lestari, may benefit from rising palm oil prices, Hardy said by phone today.

“Business prospects in 2014 are expected to remain positive although the competition in car market will remain high and coal price is still falling,” Astra’s President Director Prijono Sugiarto said in an e-mailed statement.

Palm oil futures have climbed 4.5 percent this year, reaching a 17-month high on Feb. 26 amid speculation inventories in Malaysia may decline and dry weather in South America will reduce output of soybeans that can be crushed to make an alternative oil.

Domestic Sales

Car sales volumes in Indonesia are expected to be similar to last year’s, Johnny Darmawan, the President Director of PT Toyota Astra Motor, a unit of Astra, said on Jan. 7. Sales in the world’s fourth-most populous country rose to 1.23 million units last year from 1.12 million in 2012, according to data on Astra’s website. Motorcycle sales climbed to 7.74 million units from 7.06 million.

Darmawan said higher interest rates and a weaker rupiah may prevent car sales from gaining this year. Bank Indonesia’s Governor Agus Martowardojo embarked on the country’s most aggressive rate-tightening cycle in eight years to support the rupiah, which fell 21 percent last year, the most since 2000.

To contact the reporters on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net; Yudith Ho in Jakarta at yho35@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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