Bank Profits Rise as Miners’ Earnings Slide
Tito Summa Siahaan
Profit for consumer-related companies were strong, boosted by domestic spending, while mining-related firms took a hit.
Combined profit for the 42 of 45 companies in the LQ-45 index that reported their latest income statements dropped 1.1 percent to Rp 38.26 trillion ($4 billion) in the second quarter from the same period last year, according to Bloomberg data. Companies that make the LQ-45 are among the largest by value and have total market capitalization of Rp 2,413.9 trillion — amounting to 67 percent of all stocks that trade on the Indonesia Stock Exchange.
Banks were among the companies with the biggest profit increases, thanks to low borrowing costs that are spurring consumers to take out loans. Bank Danamon Indonesia’s profit rose 55 percent, while Bank Central Asia 7.9 percent was the smallest. Six lenders had combined net income of Rp 14.2 billion, a 20 percent increase.
Among property developers, five of six real estate-related companies reported higher profit. Net income at Kawasan Industri Jababeka, an industrial estate developer, climbed more than fivefold increase in profit to Rp 153 billion.
Bucking the trend, Bakrieland Development, the property development unit of the Bakrie Group, saw its net income decline 86 percent to Rp 15.3 million.
Among cement companies, Semen Gresik and Indocement posted higher first-half earnings, up 9 percent and 35 percent, respectively. Demand for building materials is on the rise as Southeast Asia’s largest economy improves its infrastructure.
Companies involved in mining and palm oil were among the biggest losers. Earnings dropped as the rupiah weakened, global demand for goods dropped and operating expenses climbed.
All three palm oil producers listed on the LQ-45 index saw their net income decline in the first half. Net income at Astra Agro declined 5.7 percent to Rp 580 million, London Sumatra’s plunged 31 percent to Rp 340 million and BW Plantation’s tumbled 39 percent to Rp 71.6 million.
Palm oil producers also faced a maximum 22.5 percent tax for crude palm oil (CPO) exports imposed last year as part of the government’s attempt to boost the upstream sector.
In mining, Bakrie-affiliated Bumi Resources, Indonesia’s largest coal miner, had a net loss of Rp 2 billion — adjusted from dollar terms — swinging from Rp 1.4 billion in net income in the same April-June period last year.
Aside from commodity price downswings and a weakening demand, Bumi also dealt with huge interest payment, boardroom quarrel and an concerns over its ability to pay its debt.
Net income at Vale Indonesia, the nation’s biggest nickel producer, plunged 99 percent and earnings at state-controlled Aneka Tambang dropped 86 percent.
Two coal miners, Harum Energy and Indo Tambang Raya Mega, still managed to report an increase in net income. Harum saw its net income climb 32 percent, while Indo Tambang reported a 20 percent increase in profit.
Forty-two of 45 companies in the LQ-45 had submitted their first-half earning results as of Friday.