Tunas Ridean Sees Profit Growth Stalling on Lagging Economic Growth
Jakarta. Local automotive distributor Tunas Ridean projects flat profit growth this year as the company’s car sales are projected to stall this year amid lagging growth in Southeast Asia’s largest economy.
Tunas Ridean expects net income to be steady in 2015, said Rico Setiawan, president director of Tunas Ridean, on Wednesday. Profit last year was Rp 253 billion ($20 million). The company forecasts revenue of between Rp 10 trillion and Rp 11 trillion by the end of the year, about 4 percent higher than in 2014.
“The automotive scene is still very much competitive. A lot of our rivals are coming out with new brands, and the economy is slowing,” Rico said.
Tunas Ridean sold 11,346 new four-wheeled vehicles in the January-March period, down 19 percent from the year before. This dragged revenue down 12 percent to Rp 2.5 trillion.
Tunas Ridean’s sales decline was largely in line with the trend in car sales nationally, which fell 14 percent to 282,000 units in the first quarter due to slowing economic growth across the country, according to the latest data from the Indonesia Automotive Industry Association (Gaikindo).
Still, Rico is upbeat that the company’s sales will pick up in the next three months by a range of 5 percent to 10 percent with the help of new product releases and a hopes of faster economic growth in the second half.
Tunas Ridean — which draws revenue from its automotive, rental and multifinance businesses — set aside capital spending of Rp 677 billion this year, up 18 percent from 2014.
The government wants to boost the country’s economy by 5.7 percent this year, after growth at 5.01 percent last year was the country’s weakest pace since 2009. Against this backdrop, Gaikindo estimate national car sales at 1.2 million units for 2015, matching last year’s sales figure.
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Source: The Jakarta Globe