PGN sharply revises downward profit target

IDX-listed gas distribution company PT PGN Tbk has sharply revised downward its net profit target for this year amid weak gas demand from customers and pressure to cut down selling price, Bisnis Indonesia reported on Wednesday.

The paper quoted PGN Finance Director Nusantara Suryono as saying that the net profit this year is estimated at around US$150 million, or about Rp 2 trillion. This is much lower than the Rp 3.7 trillion initial target set by the Office of the State Minister of State-Owned Enterprises when determining the dividend payout ratio of the state-controlled company earlier in the year.

Nusantara said that PGN is now facing tough challenges. ?Gas volume absorbed by customers have sharply declined. Our selling price has also declined at the request of various institutions in Indonesia,? he said.

PGN said late last month that net revenue in the January-June period of this year slightly declined to $1.41 billion from $1.44 billion in the corresponding six months period of last year due to weaker demand from customers.

PGN also said that net profit in the first semester of this year was only $50 million. While it did not provide year-on-year comparative figure, it is a more than 67 percent drop from $152.45 million in the first half of last year.

The company said it was particularly facing tough challenges this year, not only due to weaker demand from industries due to slower growth in global and local economy, but also amid government pressure for the company to lower gas price for end consumers to help improve competitiveness of domestic manufacturing industries.(*)