FY14 Sales Grow 5.8% Driven by Continued Strength in Export Markets
The Company’s net sales reached Rp 13,071 billion in 2014 compared to Rp 12,353 billion in 2013. This growth of 5.8% is mainly driven by continued strength in the Company’s export markets. The strong export performance was also supported by a weakening Indonesian Rupiah. Apart from Oceania, the Company achieved sales and volume growth in all its export markets. Main contributor for the buoyant growth in exports is the Company’s sales into the Americas, largely driven by the strength of the US economy. Furthermore, the Company has been able to grow its sales into the OE segment, with particular strong growth in the OE radial market, despite an environment of slowing Indonesian new car sales. The Company has been able to achieve this by supplying to popular passenger car models, amongst others, those in the Low Cost Green Car (LCGC) segment. The domestic replacement market remained challenging. Bias sales continued to be negatively affected by weak demand from the commodity related sectors, since the commodity boom seems to have come to an end for now. The Company’s sales in the domestic replacement market for radial tires declined slightly due to continued fierce competition, while motorcycle tire sales remained largely stable.
The Company’s gross profit margin declined from 20.1% in 2013 to 18.7% in 2014 largely driven by the depreciation of the Indonesian Rupiah versus the US Dollar as the majority of the Company’s cost base is denominated or linked to the US Dollar while the majority of the Company’s revenues are in Indonesian Rupiah. The Company faced higher operating expenses with increasing transportation costs as well as higher salaries and allowances as the main drivers of the increase. The higher transportation costs are a function of increased freight charges to the US and higher logistics costs in Indonesia. The lower gross profit margin and higher operating expenses caused operating and EBITDA margins to decline compared to 2013 leading to an EBITDA generation of around USD 146 million in 2014, although earnings momentum picked up in the second half of 2014 as natural rubber prices continued to decline and the depreciation of the Indonesian Rupiah versus the US Dollar was less severe. Gross margins expanded in both 3Q14 and 4Q14 resulting in higher operating margins as well as better EBITDA generation compared to the first half of the year. The Company’s net profit more than doubled from Rp 120 billion in 2013 to IDR 270 billion in 2014 as the Company incurred a less severe FX translation loss compared to 2013, given that the depreciation of the Indonesian Rupiah versus the US Dollar, based on year end exchange rates, was relatively mild in 2014 compared to 2013.
For the second consecutive time the Company received the Green Company Award by SWA Magazine. PT. Gajah Tunggal, Tbk. received this award due to the development of the IRC Enviro, Indonesia’s first environmental friendly motorcycle tire. The Company received the same award last year for Indonesia’s first environmental friendly passenger car tire, the GT Radial Champiro Eco. By receiving this award for the second time, the Company is recognized for its innovative capability and commitment to contribute to a sustainable future.