UPDATE 1-Gajah Tunggal raises tyre prices 10 pct on costs
By Lewa Pardomuan
SINGAPORE, June 16 (Reuters) - Southeast Asia's biggest tyre-maker, PT Gajah Tunggal Tbk (GJTL.JK), has raised prices by 10 percent on high raw material costs, and still aims to grow sales by up to 20 percent, a company executive said on Monday.
Some tyre companies in Asia have jacked up tyre prices to offset a rally in cash rubber, which now hovered above $3 a kg -- its highest level since the early 1950s, when the Korean War triggered a boom in commodity prices.
"We are still targeting an increase in our sales revenue of between 15 to 20 percent this year compared to 2007. The increase will be evenly contributed by an increase in selling price as well as volume," said Catharina Widjaja, director of corporate communications.
"Gajah Tunggal raised the price by around 5 percent in Q1 of 2008 and another 5 percent recently. GT will continue to monitor the impact of the rising prices of raw material," she told Reuters by e-mail.
Gajah Tunggal was up 1 percent at 460 rupiah a share by 0501 GMT. The company is 10 percent owned by French tyre-maker Michelin (MICP.PA) and controlled by tycoon Sjamsul Nursalim,
An oil-led rally in Tokyo futures <0#JRU:> and tight supplies in Southeast Asia, blamed on heavy rains, have pushed up the price of natural rubber to its highest level in half a century. <RUB/AS>.
In theory, record high oil prices CLc1 are positive for rubber, as investors believe expensive oil will encourage a shift to natural rubber from synthetic rubber, a petroleum product.
Japan's Bridgestone Corp (5108.T) in June it would raise prices on all of its tyre brands and categories in Europe over the next few months. Kumho Tires Co Ltd (073240.KS), South Korea's No.2 tyre maker, also plans a 10 percent increase.
Despite the high prices of raw material, Gajah Tunggal was on track to boost daily car tyres output to 35,000 units and motorcycle tyres production to 60,000 units a day by the end of this year on demand from foreign and domestic markets.
"We are still working towards an installed capacity of 35,000 radial tyres per day by end 2008, up from 30,000 radial tyres per day in 2007," said Widjaja.
"Also, we are increasing the installed capacity of motorcycle tires from 45,000 tyres per day in 2007 to 60,000 motorcycle tyres per day by end 2008," she said.
Widjaja gave no further details.
Gajah Tunggal posted consolidated sales revenues of 6.6 trillion rupiah ($708 million) in 2007, up 22 percent from 2006. Analysts expect the company to post sales revenues of 7.07 trillion rupiah this year.
Motorcycle sales data provided by PT Astra Honda Motor, the largest motorcycle maker in Indonesia, showed sales rising to 542,750 units in April 2008, up 72.3 percent from 314,925 units at the same month last year. ($1=9,320 rupiah) (Editing by Louise Heavens)