Industry Profie: Cable Manufacturing Industry in Indonesia

MARKET INTELLIGENCE REPORT ON

DEVELOPMENT OF CABLE MANUFACTURING INDUSTRY IN INDONESIA

March 2009

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Profile of main players

PT Supreme Cable Manufacturing & Commerce (PT Sucaco)

This company was established in 1970 with the name of PT Supreme Cable Manufacturing Corporation. In 1996, Sucaco became a public company selling part of its share at the Jakarta Stock Exchange . In 1997 , it was renamed PT Supreme Cable manufacturing & Commerce (Sucaco). Sucaco is the pioneer in modern cable industry in Indonesia.

PT Supreme Cable Manufacturing & Commerce Tbk reported sales valued at Rp2.3 trillion in 2007 or an increase of 53.85% from Rp1.5 trillion in the previous year. The sales in 2007 included exports valued at Rp537.6 billion or an increase of 413.45% from Rp104.7 billion in 2006 . Most of the exports were to Middle East.

The company, however, reported only a slight increase of 4.97% in profit to Rp54.2 billion in 2007 reflecting a sharp competition in the market.

In 2008, PT Supreme Cable Manufacturing & Commerce Tbk posted only Rp11.23 billion in profit , down 79.3% form the previous year. Its sales fell 6.8% to Rp2,127.03 billion from Rp2,281.70 billion .

Sumi Indo Kabel

PT Sumi Indo Kabel Tbk was established on 23 July 1981, with the name of PT Industri Kawat Indonesia. The company was renamed PT IKI Indah Kabel Indonesia in 1982.

In 2006, PT Sumi Indo Kabel Tbk. recorded the largest sales among publicly listed cable makers. However, in 2007, its sales fell when other companies recorded an increase. Its sales in 2007 fell 16.93% to Rp1,590 billion from Rp1,914 billion after it stopped in 2006 selling copper wires and copper rod produced by its subsidiary PT Karya Sumiden Indonesia.

The company did not sell the two types of cable as the profit margin was too low. The copper cable produced by PT Karya Sumiden is then used to feed only cable factory of PT Sumi Indo Kabel. As a result, PT Sumi Indo Kabel reported an increase in operating profit despite a decline in income as it sales and operating costs declined also decline .

A significant decline was also recorded in non operating cost from Rp19.076 billion to Rp4.573 billion resulting in a sharp increase of 74.58% in net profit to Rp77.467 billion .

PT Voksel Electric Tbk

The company is a producer and distributor of electric cables. PT Voksel Electric Tbk showed in its financial report for 2007, a 48% increase in sales to Rp 1,358.64 billion from Rp 919.53 billion in 2006 with net profit surging 51 % to Rp 53.7 billion from Rp35.59 billion.

In 2008, PT Voksel Electric Tbk recorded an estimated 46.3% increase in sales to Rp1.856 trillion . In the first half of that year it posted Rp 1,019.76 billion in sales. Company sources said PT Voksel Electric had a 30% share of supply of electric cables for the 10,000 MW crash program.

In 2008, PT Voksel held a number of contracts to supply electric cable to a number of power generating projects. Voksel supplies high voltage cable for the projects. The company has expanded its production capacity from 800 ton per month to 1,300 tons of for aluminum cables, from 130 tons to 180 tons of medium voltage cable and from 100,000 tons to 120,000 tons of fiber optic.

PT Jembo Cable Company Tbk

Consolidated sales recorded by PT Jembo Cable Company Tbk. rose 64.2% or Rp287.6 billion from Rp448 billion in 2006 to Rp735,6 billion in 2007. The sales exceeded its target of Rp 496 billion. The net profit of the company rose Rp22.3 billion from Rp600 million to Rp 22.9 billion in the same period.

Increase was recorded in the sales of low voltage electric cable with copper conductor which rose from Rp150 billion in 2006 to Rp407 billion in 2007. The sales of medium voltage electric cable rose from Rp91 billion to Rp 121 billion . The sales of metallic telephone cable rose from Rp39 billion to Rp51 billion. Decrease was recorded in the sales of low voltage electric cable with aluminum conductor falling from Rp140 billion in 2006 to Rp124 billion in 2007 and sales of fiber optic cable from Rp 20 billion to Rp 11 billion.

Kabelindo Murni

In 2007, PT Kabelindo Murni Tbk recorded a high increase in sales - up 175% to Rp 499.50 billion from Rp285.40 billion in the previous year. The surge was recorded especially in the demand for electric cables and telephone cables. Sales of electric cable on the domestic market reached Rp460.695 billion in 2007 and sales of telephone cable Rp36.72 billion.

Its profit rose 20% to Rp12.60 billion in 2007. Its sales in 2008 were estimated to rise still but not as sharp as in 2007. In the first half of 2008, its sales were valued at Rp 263 billion .

KMI Wire and Cable

PT GT Kabel Indonesia Tbk, now known with a new name of PT KMI Wire and Cable Tbk (KBLI), was estimated to chalk up an increase in income to Rp1.4 trillion in 2008 as it already secured a potential contract of Rp 961 billion on the domestic and export market.

Based on its financial report in 2008, PT KMI Wire and Cable Tbk recorded Rp 26.644 billion in net profit in 2008 or up from 2007. The increase in profit was attributable to a sharp increase in net sales to Rp 1.731 trillion from Rp451.483 billion in 2007. In 2008, the company reported a loss of Rp 17.311 billion on foreign exchange, up from Rp8.912 billion in 2007

The company said it hopes to secure order valued at Rp255 billion for exports and Rp706 billion from local buyers . The potential contracts included from PT PLN (persero) valued at Rp463 billion, from buyers abroad valued at Rp255 billion, distributors Rp181 billion, and from spot market valued at Rp62 billion.

KBLI also secured contract to supply cable valued at Rp560.3 billion with delivery on June 30, 2008 including Rp275.1 billion with local buyers and Rp282.2 billion with buyers abroad. The company sells cables mainly to Africa, Middle East and Australia.

In 2009, PT KMI hopes to post Rp48 billion in net profit with income totaling Rp1.5 trillion from the sales of copper electric cable valued at Rp949 billion and aluminum electric cables valued at Rp472 billion.

Cable exports up

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