Sales growth accelerates in 2Q14 driven by Buoyant Exports
During 2Q14 PT Gajah Tunggal’s net sales accelerated and reached Rp 6,562 Billion in 1H14 compared to Rp 6,129 Billion in 1H13, driven by continued strength in the Company’s export markets. The growth in net sales of 7% is primarily a function of an increase in sales volumes. Demand for the Company’s products from major developed markets continued to be strong as is reflected in the increased revenue contribution from our export sales. The domestic market showed a mixed picture. While the Company’s sales to the OE segment remained solid, the replacement market proves to be challenging due to intense competition in the passenger car radial tire market in particular and persistent weakness in demand for bias tires from mining and commodity related sectors.
Despite the initial strengthening of the Indonesian Rupiah in 1Q14, the currency weakened again during the second quarter resulting in a decline of 21% versus the US Dollar for the average exchange rate in 1H14 compared to 1H13. Given the mismatch between the Company’s costs and revenues in foreign currency, the weakening Rupiah had a negative impact on the Company’s profitability margins. Gross profit margins declined from 20.9% in 1H13 to 16.7% in 1H14. Although operating expenses in 1H14 remained at elevated levels compared to 1H13, there was no further increase during 2Q14, in terms of operating expenses as a percentage of revenues. The Company generated an EBITDA of IDR 799 Billion and a net income of IDR 228 Billion in 1H14 compared to IDR 1,114 Billion and IDR 460 Billion respectively in 1H13. Recently the Company has been recognized by SWA Magazine, by being included in Indonesia’s Top 100 Most Value Brands 2014 in the Auto Parts & Equipment Category with a Brand Rating of AA- (very strong). The list is compiled by SWA Magazine in collaboration with Brand Finance, an international brand consultant.