Source: Humas BNBR | 28 Apr 2014

The future business of PT Bakrie & Brothers Tbk (“BNBR” or “Company”) will focus more on strengthening manufacturing-based businesses and developing infrastructure. Both of these business sectors in recent years have contributed greatly to the Company’s performance and are expected to grow even more in the future.

During the first quarter of 2014 alone, the two business sectors run by the non-listed BNBR business units contributed 82 percent of the Company’s total revenue of Rp 2.5 trillion, and 72 percent of net income attributable to owners of the parent entity The company is worth Rp 665 billion. Throughout the first quarter of 2014, the Company successfully earned a net profit attributable to the owners of the parent entity amounting to Rp 665 billion and revenue of Rp 2.5 trillion, an increase of 15,267 percent and 291 percent over the same period last 2013.

“It seems that way. With the current global economic condition where commodity prices still tend to stagnate, we will focus more on local and regional markets, where business in the manufacturing and infrastructure businesses is very promising, and also because BNBR’s business fundamentals have indeed proven strong there, “said Bobby Gafur Umar, Managing Director of BNBR in Jakarta, Monday (28/4).

To note, BNBR’s track record in the manufacturing industry is very long, starting with the steel pipe industry in 1959, currently the manufacturing industry division continues to develop into PT Bakrie Building Industries (BBI) which manufactures various building materials for the needs of the property and construction business, PT Bakrie Autoparts (formerly PT Bakrie Tosanjaya) which produces automotive components, and PT Bakrie Metal Industries (BMI) which includes PT Bakrie Pipe Industries (BPI) which produces pipes made from iron and steel. In addition to steel pipes, BMI also handles the steel construction and fabrication business under the PT Bakrie Construction (BCons) unit. All of them are non listed BNBR business units.

In the infrastructure sector, the Company’s business unit, PT Bakrie Oil & Gas Infrastructure, has begun building the first phase pipeline, in the Kepodang gas well to Tambak Lorok in Central Java. In addition, BNBR through its business unit PT Bakrie Toll Indonesia has also begun the land acquisition stage as an initial step in the construction of the Cimanggis-Cibitung toll road.

In addition, there is still PT Bakrie Power which handles energy infrastructure development with the Tanjung Jati A. PLTU project. Bobby is optimistic, in the future all of the Company’s business units will perform better, because each business prospect is very good. He gave an example, the business prospects of PT Bakrie Autoparts were very “challenging” with the support of the large growth of the automotive industry and welcomed the Asean free area in 2015.

“Indonesia is now increasingly looked at by the world’s automotive manufacturers. Leading automotive manufacturers are increasingly convinced of the reliability of Indonesia as their production base. This provides a breath of fresh air for the Indonesian automotive industry and of course its supporting industries, including the automotive component industry. The opportunity for the growth of this industry in Indonesia is very promising. In Indonesia, the penetration rate of the automotive industry is around 80 vehicles per 1,000 people. That’s much smaller than in Malaysia, where the penetration is 330 vehicles per 1,000 people. So, the opportunity for PT Bakrie Autoparts as one of the main players in the automotive component industry is wide open, “he said.

Likewise, BBI is what Bobby calls a hopeful industry in the future. “We can see how the rapid progress and growth of the property business in the country. Coupled with Indonesia’s huge population and increasing consumer purchasing power, the company is optimistic that the building materials industry will continue to advance, “he said describing the business potential and BBI’s business prospects going forward.

In the field of highway infrastructure, the Company is also optimistic about the future of the 26 kilometer Cimanggis-Cibitung toll road business it is engaged in. According to calculations, this will be the “fattest” toll road section among a number of toll roads that will soon be built in Indonesia. This freeway will connect the two busiest toll roads outside Jakarta, the Jagorawi toll road and the Cikampek toll road. We are optimistic that the construction will be finished soon and a few years later it will become a significant contributor to the company’s revenue, “Bobby said.

Therefore, the management of BNBR believes that the manufacturing and infrastructure businesses currently run by the Company will grow and contribute more in the future. “The impact on the performance of the company is of course we hope it will also be very meaningful,” he said.

2014 1st Quarter Performance

The positive record of the Company’s performance and of course its business units in the first quarter of 2014 were indeed quite encouraging. PT Bakrie Metal Industries (consolidated from BPI and BCons) for the same time period managed to reap Rp 1.3 trillion in revenue, an increase of 277 percent compared to the acquisition of the same period in 2013. Note that the increase in net profit was also positive, reaching Rp 181, 5 billion in the first quarter of 2014, an increase of 1,836 percent compared to the same time period in 2013.

PT Bakrie Autoparts in the first quarter of 2014 managed to record revenue of Rp 207.6 billion, an increase of 4% compared to the same period in 2013 which was recorded at Rp 199.1 billion. During this time period, the company also managed to reap a net profit of Rp2.7 billion. The company will continue to focus on developing assets acquired in early 2013, and increasing its production capacity.

While BBI in this period succeeded in obtaining revenue of Rp147.5 billion and net profit of Rp10.7 billion, which reflects around 85 percent of the net profit target for 2014. The Company remains optimistic that BBI will be able to meet the 2014 target.