Indonesia Auto Firm Sees Return From Disappointing Nissan Tie-Up

  • Mitra Pinasthika to move to multi-brand distribution model
  • New president director aims to double profit margins

PT Mitra Pinasthika Mustika’s new president director is aiming to turn around the fortunes of an Indonesian auto company that’s been hurt by slowing vehicle sales and a disappointing partnership with Nissan Motor Co.

Rudy Halim, who took over in May, said he wants to double after-tax profit margins by 2020 and increase the company’s market capitalization fivefold. Mitra Pinasthika’s share price tumbled 67 percent from its May 2013 listing through the end of last year, while net income was 285 billion rupiah ($22 million) in 2015 from 526 billion rupiah in 2013.

“My promise to myself is in 18 months I will turn around the business back to at least the 2013 numbers, because we lost opportunities in 2014 and 2015,” Halim said in an interview in his office on Friday. The company, which sells and distributes Honda Motor Co. motorcycles and Nissan automobiles, will move to a multi-brand car distribution model, he said, without giving further details.

Indonesian car sales dropped 18 percent from 2013 to 2015 and motorcycle sales fell 16 percent, according to industry association data, as a slowdown in economic growth deterred people from buying big-ticket items. Nissan was particularly hard hit with local consumers buying just 25,000 of the company’s cars last year, compared with 61,000 in 2013.

Mitra Pinasthika reported 180 billion rupiah in net income for the first half, still 23 percent less than the same period in 2015 but improving from 52.5 billion rupiah recorded in the final six months of last year. The company’s share price is also recovering, jumping 50 percent since Halim took over on May 31.

“Investors have been disappointed with falling earnings over the past two years and the partnership between the company and Nissan also failed to deliver the results that people were expecting,” said John Teja, a director at PT Ciptadana Securities in Jakarta. “The recent rally might have been fueled by some optimism on the economic recovery and expectations that the new management might be able to turn the company around.”