INTERVIEW-UPDATE 1-Indonesia's Astra sees record car sales

Mon Jun 7, 2010 1:56pm IST

Stocks

   

* Raises 2010 vehicle sales forecast again to record 650,000

* Resource-rich areas drive demand for autos, heavy equipment

* Eyes coal mine deals, sees future growth in infrastructure

* Shares recoup losses, down 1.9 pct vs index's 2.8 pct drop

(Updates with details, quotes)

By Janeman Latul and Sara Webb

JAKARTA, June 7 (Reuters) - Indonesia's biggest listed firm PT Astra International (ASII.JK) sees 2010 vehicle sales rising to a record 650,000 as low interest rates spur consumer demand, and aims to spend its cash on expansion in mining and roads.

Vehicle sales in the first five months have reached 299,000 units, up 77 percent from a year ago as consumer confidence has turned around from the financial crisis, said Prijono Sugiarto, president director of Indonesia's largest listed conglomerate with heavy equipment, palm oil and infrastructure businesses.

"We will probably hit 650,000 units without any tax implemented whatsoever," Sugiarto told Reuters on Monday in an interview at the firm's sprawling 20-hectare grounds in north Jakarta.

"If we are lucky, we will hit 700,000 but if we're not, at least we've got 650,000."

The 650,000 figure represents a 34 percent increase from 2009, and tops Astra's previous forecast of more than 600,000. Its previous record year was in 2008 when it sold 608,000 units. The higher forecast depended on the government not raising road tax or car registration tax this year, Sugiarto said.

Sugiarto, who navigates Jakarta's traffic jams in a Toyota (7203.T) Lexus hybrid, said the financial crisis had spurred a switch from medium-priced family cars to cheaper models, for which Astra was the country's leader producer.

The first vehicle for most new buyers was still a motorcycle, he said, adding that motorcycle sales would reach 6.7-6.8 million, above last month's forecast of 6.5 million and up 16-17 percent from last year.

Sugiarto said the higher sales would translate into an expected profit rise in 2010 but declined to comment further.

Net profit in 2010 is expected to reach 12.26 trillion rupiah

($1.34 billion), according to Thomson Reuters I/B/E/S, up 22 percent from 10.04 trillion rupiah in 2009.

Shares of Astra recouped some of their losses after Sugiarto's comments, to trade 1.9 percent lower at 44,100 rupiah by 0820 GMT, outperforming the broader Indonesia stock market's .JKSE 2.8 percent drop as global investors fled risky assets.

Vehicle sales are a widely followed barometer for the state of consumer demand in Southeast Asia's biggest economy. Consumption makes up about two-thirds of the roughly $515 billion economy, which proved resilient to the financial crisis. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic on the economy and vehicle sales, click on:

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EYES ROADS, MINES

Indonesia stands to attract more investment in future from automakers, he said, given that political stability has improved after President Susilo Bambang Yudhoyono's re-election last year, in contrast to the increased political risk in regional auto manufacturing hub Thailand.

"I keep telling my sales people that the right time to overcome Thai sales is this year," said Sugiarto, 49, a former sales manager at Mercedes-Benz (DAIGn.DE) who trained as a mechanical engineer in Germany.

Incomes are rising partly thanks to a commodity boom, particularly on the resource-rich islands of Sumatra, Kalimantan and Sulawesi.

Sumatra's share of sales has increased to 20 percent from 15 percent three to four years ago, while Java and Bali now account for only 50-60 percent, down 5-7 percentage points.

"It's probably also as a result of regional autonomy because they have now more money. It's a positive trend for us," he said.

Astra, controlled by Singapore's Jardine Cycle & Carriage Ltd (JCYC.SI), has a stock market value of $19.8 billion.

Its heavy engineering unit, United Tractors (UNTR.JK), aims to expand by acquiring three coal mines with total reserves of 100 million tonnes in the next year, using up to 5 trillion rupiah earmarked for capital expenditure, Sugiarto said.

Its palm oil unit, PT Astra Agro Lestari (AALI.JK), expects to increase its landbank by less than 10,000 hectares this year, and keep crude palm oil production roughly steady compared with last year's 1.08 million tonnes, Sugiarto said.

He said expansion in both palm oil and coal mining could be restricted by Indonesia's recently announced two-year moratorium on the clearing of natural forests. [nSGE65209C]

But he said future growth for the group could come from expanding in infrastructure and toll roads once the government resolves land clearance issues, sectors also attracting interest from private equity firms. [nJAK239568]

Astra shares have risen around 25 percent this year, beating the overall index, which is up 8 percent. Over a 12-month period, Astra shares are up 80 percent while the index is up 32 percent.

($1=9175 Rupiah)

(Editing by Neil Chatterjee)

((janeman.latul@thomsonreuters.com, Reuters messaging: janeman.latul.reuters.com@reuters.net; +6221 384 6364))

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