PT Gajah Tunggal Tbk Records YoY Sales Growth in 1H17 Despite Lower Working Days
PT Gajah Tunggal Tbk recorded a 4.3% sales growth in 1H17 compared to the corresponding period in the previous year. The Company’s sales increased from Rp 6,949 billion in 1H16 to 7,248 billion in 1H17 despite lower working days due to the Lebaran holiday period. Major driver of the achieved sales growth was the Company’s sales performance in the export markets growing by 8.0% and to a lesser extent the performance in the domestic replacement market where the Company achieved a sales growth of 2.2%.
The Company’s gross margin declined from 24.5% in 1H16 to 17.4% in 1H17 mainly due to higher key raw material prices. The favorable impact of the decline in natural rubber prices in 2Q17 has not been captured in the Company’s margins yet due to the typical time lag. Operating margins declined from 12.2% in 1H16 to 6.9% in 1H17, although the decline was less compared to the decline in gross margin due to an improved opex/sales ratio. The Company’s operating expenses increased less than the Company’s sales mainly due to lower transportation costs and lower incentive performance expenses. Consequently the Company’s EBITDA declined from Rp 1,200 billion/USD 88.9 million in 1H16 to Rp 871 billion/USD 65.2 million in 1H17. The Company recorded a loss on product recall due to the voluntary product recall conducted in July 2017, which is an extension of the voluntary recall initiated in September 2016. As a result the Company recorded a net loss of Rp 41 billion in 1H17 compared to a net profit of Rp 409 billion in 1H16.
The Company has also secured funds to refinance the outstanding 7.75% Senior Secured Notes maturing in 2018. On 28 July 2017 the Company signed a Senior Secured Syndicated Financing Facility Agreement for USD 250 million, comprising a USD 210 million tranche and USD 40 million equivalent tranche in IDR (IDR 534.2 billion) with a tenor of 5 years. The Facility will be amortizing and the USD portion of the principal will be hedged. Furthermore, on 3 August 2017, the Company successfully issued USD 250 million, 8.375% Senior Secured Notes maturing in 2022. The Company has issued a redemption notice on 11 August 2017 to redeem the 2018 Senior Secured Notes at the optional redemption price of USD 101.9375 which will be effective on 11 September 2017.
On 20 August 2017 “Taman Gajah Tunggal” (Gajah Tunggal Park) was inaugurated by Mayor of Tangerang, Mr. Arief R. Wismansyah, his deputy Mr. Sachrudin and Mr. Budhi Santoso Tanasaleh, President Director of PT Gajah Tunggal Tbk along with other Directors of the Company. Taman Gajah Tunggal was built on an area of 7,000 sqm and is one of the largest parks in Tangerang. The park is unique since it has been constructed using recycled tires. The support the Company provided for the construction of the park is part of the Company’s CSR-Program. The Company was also awarded as one of the “20 Rising Global Stars 2017”, by Forbes Indonesia. The selected companies included in the list managed to create, introduce and market their brands locally as well as having the ability to penetrate the international market.