UNTR Business Strategy and Prospects When the Dollar Strengthens & External Sentiment

April 25, 2024, 08.15 AM  | Reporter: Ridwan Nanda Mulyana
UNTR Business Strategy and Prospects When the Dollar Strengthens & External Sentiment

ILUSTRASI. Komatsu heavy equipment marketed by Astra's subsidiary, PT United Tractors Tbk (UNTR).

LISTED COMPANY - JAKARTA. The bustling external sentiments, such as geopolitical tensions and commodity price fluctuations, have had an impact on the business of PT United Tractors Tbk (UNTR). The strengthening of the US dollar, which has caused the rupiah exchange rate to plummet to the level of Rp 16,000, could also affect UNTR's performance.

United Tractors Director Iwan Hadiantoro acknowledged this. However, Iwan is optimistic that with its diverse business segments, UNTR will be able to mitigate the impact of these sentiments.

"This is the beauty of UNTR, our business is diversified," said Iwan at a press conference on Wednesday (24/4).

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Iwan then exemplified that the strengthening of the US dollar would put pressure on the heavy equipment business segment. With a large portion of imports, UNTR must incur higher costs, thus making prices more expensive.

"Rupiah depreciation will have an impact on the construction machinery-related business," added Iwan.

This condition is in line with the estimated decrease in heavy equipment sales this year, where UNTR projects a decrease of about 20%-25%. Iwan said, this year UNTR is targeting heavy equipment sales of 3,900 - 4,000 units, lower than the realization of Komatsu heavy equipment sales of 5,270 units last year.

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Meanwhile, until the first quarter of 2024, Komatsu's sales volume was recorded at 1,126 units. This is a decrease of 37.13% compared to the same period last year with a sales volume of 1,791 units.

Although there is pressure on the heavy equipment segment, current external sentiments and exchange rate fluctuations bring positive catalysts for UNTR's commodity business, especially coal and gold.

"To a certain extent, we get a windfall. So the effect on the bottom line is expected to offset the decline in heavy equipment sales," explained Iwan.

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On the other hand, this issuer from the Astra Group has not stopped expanding. United Tractors President Director Frans Kesuma stated that UNTR is still looking for acquisition opportunities if there are attractive assets that meet the criteria to support UNTR's diversification into non-coal businesses.

Therefore, the focus of UNTR's acquisition and expansion will target the mineral commodity and renewable energy segments.

"We keep looking and seeing, are there opportunities? If there is potential, we will follow up, we will review," Frans emphasized.

As is known, UNTR is keen on expanding by acquiring several nickel and geothermal companies. Most recently, in March, UNTR acquired Supreme Energy Rantau Dedap for a transaction value of US$ 80.69 million, or equivalent to Rp 1.26 trillion.

To support this expansion action, Iwan confirmed that UNTR has funding readiness. The source of this funding includes third parties or bank loans with facilities of up to around US$ 2 billion. 

As for capital expenditure (capex) this year, UNTR has also allocated a large budget. Iwan stated UNTR's capex projection reaches US$ 1.3 billion - US$ 1.4 billion. 

UNTR's capex will be used to support the mining contractor business of around US$ 1 billion. Then US$ 100 million for expansion in coal infrastructure, US$ 100 million for gold mining business development, and about US$ 100 million for the heavy equipment segment.

"We adhere as much as possible to business as usual will be fulfilled from internal cash, which is sufficient to finance capex. But for new business and investment needs, we are assisted by funds from third parties," Iwan concluded.

Editor: Syamsul Azhar

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