2008-2009 DATA CONSULT. All rights reserved.

INDONESIAN COMMERCIAL NEWSLETTER
March 2009

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PERFORMANCE OF LISTED COMPANIES IN 2008 REFLECTS THE STRENGHT OF INDONESIA'S ECONOMIC FUNDAMENTALS


The fundamentals of Indonesian economy amid the global financial crisis is quite strong as indicated by the performances of publicly listed companies   in 2008. Based on their 2008 financial reports already published, the income of 45 most liquid (LQ45) listed on the Indonesian Stock Exchange for 2008, grew 34%.

Several mining companies like Indo Tambang Raya Megah, Tambang Batubara Bukit Asam,   and Adaro Energy even recorded a growth of more than 40% in 2008 in volume and value.

Among those operating in the mining sector a decline in net profit was recorded by tin and nickel mining companies as the price of the two commodities declined in 2008 after peaking in 2007. Oil companies also recorded a decline in profit in 2008 as the price of oil plunged to the lowest level in two years.

PT Aneka Tambang in 2008 recorded a net profit of only Rp1.3 trillion in 2008 down from Rp5.1 trillion in 2007 or a decline of 73%. Similarly PT Timah and PT Inco posted a sharp fall in profit.

Profit of companies in the agricultural sector up sharply

Eight listed companies in the farm and plantation sector including Astra Argo Lestari, Tunas Baru Lampung, Bakrie Sumatra Plantation, Sampoerna Agro, Astra Agro Lestari, PP London Sumatera BISI International and Gozco Plantation recorded a 47.8% increase in income in 2008 year-on-year.

Some of the companies recorded a decline but other recorded an increase in net profit in 2008 year-on-year. Astra Agro Lestari in 2008 reported a net profit of Rp 2.63 trillion or an increase of 33% from Rp 1.97 trillion in 2007.  Bakrie Sumatera Plantation reported a decline of 16% in net profit. However, altogether the 8 companies recorded a 50.3% increase in net profit in 2008

Listed companies operating in consumer goods industry recorded a strong growth of 24% in income and a 17.4% increase in net profit year-on-year in 2008.

Generally LQ45 companies posted an increase in net profit in 208. Only 10 of them recorded a decline in profit and one, Barito Pacific, suffered a net loss. The loss was recorded by its petrochemical subsidiary Chandra Asri, which was acquired in 2007.
Large issuer like Astra International in 2008 recorded a 38.3% increase in income  from  Rp 70  trillion in 2007 to Rp97 trillion in 2008  with profit rising from Rp 6.5 trillion to Rp 9.2 trillion  or an increase of 41%. See the following table.

Good performances of listed companies contribute to economic growth

Good performances of publicly traded companies in 2008 and in the first quarter of 2009 contributed substantially to growing confidence of investors and the business sector to the country's economy.

Amid heavy pressures with shrinking exports and difficulty in securing foreign funds are among big challenges to be faced by many countries including Indonesia and other ASEAN countries. Some neighboring countries are facing greater problems  such as Malaysia and Singapore, which are more export oriented  and foreign investment. The Indonesian condition, which was previously a weakness, has become a factor contributing to the country's economic resilience.

The strength of the domestic market is shown by the fact that many listed companies, oriented to the domestic market, such as those producing consumer goods, posted substantial profit in 2008. Slump has also hit the domestic market but some indicators show improvement in the market condition. Inflation is well under control, allowing the central bank to cut its benchmark interest rate to as low as 7.5%. If banks follow the lead by taken by the central bank, and boost credits, the purchasing power of the people will increase.

Despite the decline in exports, many Indonesian commodities are still high in demand in export market. Exports of palm oil and coal are picking up. The success in the recent legislative elections at least from the security point of view, also contributed to improvement of the confidence of the business sector.

Indonesia fares better than many other countries  facing the devastating impact of the global financial crisis. Thailand is facing political turmoil and security problem undermines political stability in the Philippines. Even Malaysia, and Singapore, which have been much more successful in economic development are in no better condition than Indonesia.

With healthy economic fundamentals, the future government will have greater confidence in bringing about greater prosperity to the country in the coming years.




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