Krakatau Steel Optimistic Performance Growth Will Continue to Improve

INDUSTRY.co.id - Jakarta - PT Krakatau Steel (Persero) Tbk (KS) is optimistic that the company's performance growth will continue to improve. This is driven by the steep rise in steel prices since the last two years.

"The price of steel continues to decline from 2011 to 2015. Currently the price of domestic CFR HRC in December 2017 has reached USD562 / mt or sharply increased 260% from December 2015 which only reached 216 / mt," said President Director of PT Krakatau Steel, Mas Wigrantoro Roes Setiyadi when conducting public exposure, in Jakarta (27/12/2017).

He said the rise in steel prices was triggered by rising steel demand in China caused by restocking factors and stronger demand for steel for the housing sector.

The Chinese government's plan to reduce steel production by 100-150 million tons in the next five years also gave a positive sentiment for global steel price strengthening. On the other hand, the HRC demand level also increased 6.6% yoy to 4.4 million tons during the period from January to December 2017.

Furthermore, he said, the positive trend of rising steel prices is also followed by the Company's move to expand its plans.

"Looking at the national steel demand growth of 12.7 million tons in 2016 and the gap of domestic and imported steel supply reaching 6.9 million tons in the same year, the Company added HRC production through the development of HSM # 2 (Hot Strip Mill # 2) which will be completed by 2019. HSM # 2 will add 1.5 million tons of HRC production to 3.9 million tons per year, "he added.

In addition, to meet the steel plate of automotive market share, the joint venture of Krakatau Nippon Steel Sumikin was built and commercially operated since July 2017. Accordingly, the steel construction market will also be filled with Krakatau Osaka Steel joint venture company, both of which have commercial operations and capacity 500,000 tons per year.

"Not only that, through the joint operation with Sango from Japan, we also increase the production ability of wire rod in order to supply the wire rod products to the automotive sector by 40,000 tons per year. Through this cooperation, the company will increase the production of wire rod to 400,000 tons from the previous 350,000 tons per year, "he said.

For performance during the first nine months of 2017, KS posted revenues of US $ 1.04 billion. The value of the income rose 5.87% over the same period last year.

Consistently the Company continues to show improved performance, wherein the Company's revenues increased by 5.87% to US $ 1,039.91 million in 9M2017 compared to the same period last year of US $ 982.29 million.

The improvement in the Company's revenues was also reflected in the significant increase of the Company's cash flows in 9M2017 by 499.71% to US $ 121.13 million from US $ 21.20 million in 9M2016.

The improvement in the Company's performance is also evident from the Company's significant net loss of 34.57% to US $ 75.05 million compared to the loss in 9M2016 of US $ 114.70 million.

In addition to improvements in terms of revenue, improved performance of KS also due to a sharp decline in exchange rate loss of 95.13% and a decrease in financial expenses by 17.59% over the same period last year.