Holcim Falls Most in Four Years on Higher Royalty: Jakarta Mover

Dec. 28 (Bloomberg) -- PT Holcim Indonesia, a unit of the world’s largest cement maker, plunged the most in more than four years in Jakarta trading after it agreed to pay higher royalty fees.

Holcim Indonesia slumped 17 percent to 2,900 rupiah today, the steepest decline since October 2008 and the biggest drag on the benchmark Jakarta Composite Index, which gained 0.8 percent. Trading volume for the stock was more than 13 times its three-month daily average, according to data compiled by Bloomberg.

The company, based in Jakarta, signed a royalty agreement with Holcim Technology Ltd. on Dec. 26, as part of a move to standardize licensing agreement globally, according to a statement to the stock exchange. Under the new accord, Holcim will pay a 4 percent tariff rate next year and 5 percent in 2014 and beyond. This compares with the current rate of 2.5 percent, according to Rusli Setiawan, a company spokesman.

“This will hit the company’s margin and bottom line,” said Triwira Tjandra, a Jakarta-based analyst at Ciptadana Securities. “My calculations suggest this could push down the earnings by 25 percent to 33 percent from the current level.”

Holcim Indonesia shares have climbed 64 percent this year before today’s decline, outperforming the 12 percent gain in the benchmark index. That compares with its competitors PT Indocement Tunggal Prakarsa and PT Semen Gresik, whose shares have risen 32 percent and 40 percent respectively in the same period.

To contact the reporter on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net