Company latest updates – August 2016

FajarPaper delivers a strong result with new product successes

Innovative new product lines have proved highly popular, raw materials prices continued to ease and new capacity is on schedule for the end of 2016 to meet the rise in demand.

Jakarta 10 August 2016:  PT Fajar Surya Wisesa TBK (FajarPaper) has released its unaudited results for the six months to June 30th 2016. FajarPaper’s latest unaudited financial statements for the six months periods ended 30 June, 2016 and 2015, can be found by following this link: http://www.fajarpaper.com/investor-relations/financial-reports

Result highlights – the new product range

Net sales are substantially higher, by 27% to Rp 3,217 billion compared to the same period a year ago, reflecting higher prices plus an increase of 4% in sales volume to over 514,000 tons. Net income to shareholders has recovered strongly to Rp 404 billion or Rp 163 per share.

The company has successfully pioneered new high quality, high strength, lighter grammage packaging paper in the Indonesian market under two new brand names, ‘PrimeLiner’ and ‘PerformaMedium. Together they accounted for just under one third of total sales volumes over the period. The new brands have generated considerable positive interest from the market as their usage contributes to savings in transportation costs among end users, including leading consumer goods and food & beverage producers. Demand for the new FajarPaper products has risen significantly, given the short period since they were first introduced at the end of 2015, and this has underpinned current price levels. All other lines are also doing well.

FajarPaper’s new paper machine PM8, due for commissioning at the end of 2016 will be dedicated to produce the new lightweight packaging paper, and delivers an extra 350,000 tons per annum, an addition of around 30% to total manufacturing capacity which will rise to 1,550,000 tons per annum.

Investment in energy

An up-to-date new 55 MW cogeneration power plant will be completed, coinciding with the commissioning of PM8, enabling the company to manage future energy needs efficiently and reducing total energy cost by around 15%.

The scheduling of the capital expenditure to complete the capacity expansion and associated infrastructure is concurrent with rapidly rising sales of the lightweight paper, as an increasing number of end user customers are switching the new product range. 

Positive changes drive up profitability

EBITDA (earnings before interest, taxes, depreciation and amortization) has risen 140% to Rp663 billion, or the equivalent of US$50 million. The company has achieved a return to strong profitability with improved margins as a result of increase in selling prices, reduced production costs and improved end user demand.

The performance in 2016 has been in contrast with conditions a year ago while the company was incurring addtional costs through a period of trialling the new product with customers. Such extensive testing and the very positive market reaction, places the company at a significant advantage as the general economy and consumer spending gathers momentum.

Changing market conditions have placed pressure on smaller packaging paper manufacturers, some of which have downsized or shut down operations completely, contributing to a scarcity in packaging paper supply. This has prompted leading consumer goods manufacturers to initiate direct contact with FajarPaper, instead of via fabricators, in order to secure a guaranteed, quality source for their packaging paper needs. 

Financial position

The improved performance has contributed to strengthening the balance sheet. Total debt has reduced to around US$ 235 million. A short-term increase in trade payables by Rp 606 billion was attributable to purchases of raw materials in advance of the long seasonal Lebaran holida to assure continuity of plant operasions. SIgnificantly improved net income has given a rise to retained earnings, part of equity, of close to sevenfold from the position at the end of 2015.

Forward looking

Fast forward to 31 December 2016, total sales revenue is projected to be around Rp 6 trillion, and EBITDA expected to be around USD 90 million. FajarPaper is well positioned for the future, firstly from market acceptance of the new products, secondly from the production efficiencies in raw materials inherent in producing these new lines, thirdly in capitalizing from a ‘first mover’ advantage, and lastly from energy cost reduction once the new cogeneration power plant is online.

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PDF of press release information can be found at www.fajarpaper.com/investor-relations/presentation