Indonesian road firm PT Hutama Karya bullish

The state-owned Indonesian road firm, PT Hutama Karya, is bullish with strong results.
Finance & Funding / February 14, 2020 1 minute Read
By MJ Woof
The Trans-Sumatra Toll Road project will boost the economy of the region image © courtesy of PT Hutama Karya

Indonesia’s state-owned construction company PT Hutama Karya (Persero) reports solid financial performance for the third quarter of 2019. This period ended in September 2019.

According to the company's unaudited financial statements, the firm reported net profit of Rp 2,101 trillion, an increase of 43% from the third quarter 2018.

This was double the September target set last year, and a full 95% of the annual profit target. The firm said that this was achieved by streamlined work flows, efficiency in procurement and general business innovation, so that Cost of Revenue decreased by 82%.

"By the end of 2019, Hutama Karya had finished constructing 469.5km of the JTTS (Trans-Sumatra Toll Road), with 373km of the toll road in full operation, including the 140 m Bakauheni-Terbangi Besar section, the 189km Terbangi Besar-Pematang Panggang-Kayu Agung section, and the 13km Medan-Binjai and 22 km Palembang-Indralaya sections. Meanwhile, the 74km Sigli-Banda Aceh section and 131km Pekanbaru-Dumai sections 1-6 are presently under construction," said president director of Hutama Karya, Bintang Perbowo.

Bintang says that Hutama Karya hopes to finish construction of the Trans-Sumatra Toll Road by 2024 and is ready to work on other strategic national projects. "To finish the construction of Trans-Sumatra for 2024, Hutama Karya requires some Rp460 trillion of total investment. As of September 2019, our company's Gross Gearing Ratio was 0.67, with a Debt Covenant of 2.25. So the company still has a room to add sources of funding," Bintang said.

In order to fulfill the loan portion as one of the funding sources, Hutama Karya is planning to issue a global bond in the near future. "We are currently preparing for the Global Ratings process and other permissions," addd Bintang.

Hutama Karya was assigned by the government to develop and operate the 24-section 2,769km Trans-Sumatra Toll Road, connecting Aceh Province with Lampung Province. Currently, there are 12 priority sections being constructed, which are expected to boost the regional as well as national economy. This mega project also makes Indonesia part of the Asian Highway Network, the land transportation network with 141,000km international standard highways that passes through 32 countries.

"The existence of Trans-Sumatra will provide many logistical as well personal benefits in Sumatra due to shorter travel time, which will reduce the logistics costs for local products, as well as natural resources and other resources which can be distributed faster with affordable cost. The priority is to expedite the mobility of goods and people, such as from Aceh to Belawan Port, Medan and Kualanamu International Airport, which will boost the tourism industry, increase the commuter flow in Stabat-Binjai-Medan, and reduce the congestion in Medan."