United Tractors, Indonesia’s largest heavy equipment distributor, has cut its sales target this year to reflect demand by coal miners after a fall in the price of coal.
It was the first time the company announced its sale target.
Sara K. Loebis, corporate secretary of United Tractors, said the company lowered its sales target of Komatsu heavy equipment to 8,500 units this year, from the original forecast of 9,500 units. The new target is still 0.4 percent higher than the 8,467 units sold last year.
She said the downward trend of coal prices would likely result in smaller investments by coal producers, leading to smaller demand for heavy equipment. Miners are the biggest buyers of heavy equipment in Indonesia.
“The revision of the target was done to anticipate the decline in investments by coal miners,” Sara told Investor Daily on Monday.
She said that by contrast, coal companies had increased their investments last year as global coal prices were spiking.
The company, the heavy equipment unit of Astra International, runs its mining contracting service operation through subsidiary Pamapersada Nusantara. Pamapersada’s main customers include some large coal miners such as Adaro Indonesia, Indominco Mandiri, Kideco Jaya Agung and Kaltim Prima Coal, according to the company’s website.
United Tractors’ sales of Komatsu rose almost 4 percent to 3,729 units in the first five months of this year from 3,591 units in the same period in 2011. The mining sector accounted for 60 percent of the heavy equipment sales, agribusiness 20 percent, the construction sector 13 percent and the forestry sector 7 percent.
“The decline [in sales] started in June,” Sara said. “We are not only facing falling demand but also stiff competition.”
Still, she said, United Tractors remained the market leader in the country, controlling 45 percent of the market share of heavy equipment.
She also said she hoped that the other businesses would help the company sustain its income growth this year. Sales of heavy equipment contribute to about half of its total consolidated revenue in the company. Other than the heavy equipment distribution, it also has a mining contracting business and coal mining business.
“The heavy equipment division is declining, but we haven’t seen any impact to mining contracting business because of the declining coal price,” Sara said.
Shares of United Tractors rose 2.1 percent to 22,300 in Jakarta on Tuesday.