Steel Pipe Industry of Indonesia, often called Spindo, maintains plenty of steel pipe reserves at its three storehouses in Jakarta, Bandung (West Java) and Samarinda (East Kalimantan). This is part of its corporate strategy. Tedja Sukmana Hudianto, Deputy President Director of Spindo, said that in a rapidly fluctuating market - as is the case at the moment - there is the tendency of customers to demand steel pipes rather suddenly. By maintaining sufficient steel pipe reserves the company can meet any sudden demand. Hudianto added that the company plans to establish more storehouses; in Medan (North Sumatra), Sulawesi and Papua. The establishment of more storehouses across the archipelago is part of the company's strategy to curtail distribution costs and enhance efficiency.

Efficiency is currently the key word for the company's business strategy in the years ahead. Since its initial public offering (IPO) on the Indonesia Stock Exchange in 2013 Steel Pipe Industry of Indonesia has been replacing its older manufacturing equipment with new ones in order to optimize efficiency in the production process. This has already showed good results. In full-year 2015 the company posted a 6.41 percent (y/y) growth in sales to IDR 3.58 trillion (approx. USD $265 million) as the larger sales volume managed to (more than) neutralize lower prices. In terms of volume, sales rose 20 percent (y/y) to 372,790 tons last year, while the average sales price fell 11.4 percent to IDR 9,613 per kilogram.

Spindo also plans to build a new factory in Gresik (East Java). After construction of this factory has been completed it will also move its existing factory units I up to IV to this new location.

Hudianto said the company will now focus on the construction and infrastructure sectors as the Indonesian government is making serious efforts to enhance development of these sector. The government is mobilizing its state-owned enterprises to engage in the development of public facilities and utilities. In 2015 the construction, infrastructure and utilities sectors contributed 59 percent to Spindo's total sales, followed by the automotive sector (14 percent), furniture (14 percent) and the oil & gas sector (13 percent).

Steel Pipe Industry of Indonesia's Financial Highlights:

     2012    2013    2014    2015F    2016F
Net Sales   3,093   3,534    3,368    3,655    4,150
Gross Profit    401    605     564     698     801
EBITDA    350    468     531     620     752
Net Income    111    204     215     177     240
Operating Income
   269    379     354     421     459
Earnings per Share¹     26     28      30      24      33
EBITDA Margin (%)    10.6    13.1    13.8    17.0    18.1
Profit Margin (%)     3.6     5.8     6.4     4.8     5.8

in billion IDR rupiah unless otherwise stated
¹ in IDR rupiah
Source: Bloomberg

In 2015 Spindo's net profit plunged due to foreign exchange losses. However, it targets its net profit to grow to IDR 300 billion in 2016.

Although most of the company's steel products are sold on the domestic market, Spindo also exports part of its output; to the United States, Canada and Australia.

So far in 2016, shares of Spindo have risen 6.38 percent.

Stock Quote Steel Pipe Industry of Indonesia - ISSP: