Krakatau Steel embarks on restructuring program

State-owned steel maker PT Krakatau Steel Tbk (KRAS) said it is embarking on restructuring program to improve the company's performance and help return the company to have a sound financial performance with competitive products.

The company said in a statement that the restructuring covers restructuring of debts, business and organization.

"The restructuring program aims to assure Krakatau Steel will operate more efficient and competitive in the middle of tightening and competitive global steel market," the company's President Director Silmy Karim said in a statement.

The steps that are being undertaken including selling of non-core assets, streamline organization, seeking strategic partners, spin-off as well as transforming working units that have become cost center into a profit center units by also serving non-Krakatau Steel group services and works.

Karim said the reorganization will involve all subsidiaries of Krakatau Steel group. The restructuring is expected to enable the company's working units to operate at optimum level and run business more efficient and productive.

Krakatau Steel has been hit hard with the floods of imported steel products from abroad, including from China.

He said reorganization does not always result in a mass lay-offs. "There are many ways to carry out streamlining the organizational structure," said Silmy,

The company said recently that its subsidiary PT Krakatau Daya Listrik currently holds the development of a planned 150 MW coal-fired power plant (PLTU) to be located in the company's owned industrial zone Krakatau Industrial Estate Cilegon (KIEC), Banten province.

The reason is because the company will focus in repaying its existing debts this year, which stood at US$2.49 billion at end of 2018, up 10.45% from 2017.

Editing by Roffie Kurniawan