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ASTRA group.

Key Issues

The ASTRA group has been known as a widely diversified corporation and he country's largest automotive company. It leads both in auto market and motorcycle market. Its four wheeler products include Toyota and Daihatsu, and two wheeler product is Honda. The Astra Group succeeded in weather the 1997/1998 crisis that has badly rocked many other conglomerates in the country. The group has emerged as a healthy giant continuing to expand. Now Astra is not only a leader in the auto and motorcycle market but Also in the market of heavy equipment through its subsidiary PT United Traktor and in agribusiness through PT Astra Agro Lestari, which is one of the largest producers of Crude Palm Oil in Indonesia.

In 2003, the group gave up controlling stake in car manufacturing subsidiary PT Toyota Astra Motor to its principal Toyota Motor Corporation. The Astra group is now concentrates more on distribution in its automotive division. However, its automotive division is still the largest contributor to its total income. Now the Astra Group has strengthened its position in the agribusiness. It has increased its stake in PT. Astra Agro Lestari Tbk (AAL) from 63.26% to 79.64%.

In cooperation with Standard Chartered Bank, Astra acquired 51% of PT. Bank Permata. In May, 2004, its holding company PT. Astra International Tbk increased its stake to 57.4% in United Tractors (UT) from 49.12% earlier.

Nursed by William Soerjadjaja

Astra was established in 1957 with the name of PT. Astra International Incorporated by Tjia Kian Tie, Liem Pen Hong, Parulian Nainggolan, Datu Parulas Nainggolan and Saut Guru Pamosik Nainggolan. From 1957 to 1968, there were changes in capital and in April 1968, William Soerjadjaja and family including his children Edward Soerjadjaja, Edwin Soerjadjaja, Joyce Soeryadjaja and Judith Soerjadjaja became the sole owner.

Under William Soerjadjaja the business of Astra flourished and expanded from trading to automotive, heavy equipment, office equipment, and timber industries. The New Order policy opened wide opportunity for the business sector to grow and expand and Astra took advantage of the situation. His first big success was when his company was named to import 800 Chevrolet trucks. Astra became partner for the government, in launching it ambitious economic programs.

In February, 1990, PT. Astra International sold part or 12.39% of its shares to the public. A big setback came in 1992 with the liquidation of Bank Summa, owned by the Suryadjaya family for default on a big debt to state banks. The family was forced to sell its stake in Astra to settle the debt to a consortium of state companies and private companies associated to the Prasetya Mulya Foundation. In Nov. 1993, the Astra Group was controlled by companies grouped in the foundation.

In 1998, Astra International management was taken over by the bank rescue agency BPPN over a debt of Rp.105,625,000,000. to a number of state banks and banks controlled by the government including PT. Bank Negara Indonesia, PT. Bank Danamon and, PT. Bank Mandiri.

In March 2000, the consortium of Cycle & Carriage Limited acquired the entire 40% shares held by BPPN making it the largest shareholders of the Astra Group until now. The consortium, which is the majority shareholder of Cycle & Carriage (Mauritius) Ltd (C&C) was established in March, 2000. It was based in Mauritius with shareholders including Abacus Nominees (Mauritius) Ltd and C&L Nominees (Mauritius) Ltd..

Astra International, therefore, is now owned by a number of shareholders including Cycle & Carriage (Mauritius) Ltd, JPMCB US Resident (Norbax Inc), Parmix, HSBC Bank Plc, JP Morgan BK Luxembourg SA, Government of Singapore, PT. Mitra Investdana Sekurindo, Endang Lestari Pujiastuti, The Northern Trust S/A Avfc, BBH Boston S/A and investing public.

The Astra Group has a number of divisions or sub-groups--Automotive (Automobile Group, Motorcycle Group, Component Group), Financial Services (Automobile Financing, Motorcycle Financing, General Insurance, Life Insurance), Heavy Equipment (Construction Machinery, Mining Contractor, Coal Mining,) Agribusiness (Palm Oil Plantations), Information Technology and Infrastructure.

Automotive backbone of Astra Group

Automotive industry

Astra began business in automotive industry with the establishment of PT Toyota Astra Motor in 1971, as a sole agent for Toyota cars. It also assembles Toyota cars.

Later that year it established PT. Astra Daihatsu Motor (PT ADFM) in which Astra had a 31.87% stake. This company became the sole agent and assembler of Daihatsu cars and producer of Daihatsu car components.

In 2003, Toyota Motor Corp. Japan took over the Toyota manufacturing division from Astra International and the name of PT Toyota Astra Motor was changed with PT Toyota Motor Manufacturing Indonesia (PT TMMIN). PT Astra is only given a 5% stake in PT TMMIN. The rest is held by the principal Toyota Motor Corp. Astra International now has concentrated on car distribution.

Retail sales of Toyota cars are handled by Toyota Sales Operation with 54 branch offices named "Auto 2000". Auto 2000 has units in various large cities including Jakarta, East Java, West Java, Sumatra, Kalimantan, Bali and Nusa Tenggara Timur and Nusa Tenggara Barat.

In 1991, the Astra Group established PT. Astra Otopart (PT AO) producing auto component. PT. AO was listed on the Jakarta Stock Exchange in 1998 selling 10% of its shares to the public. In 2004, PT. AO invested US$ 67 million in car and motorcycle component factory in Cibinong, West Java. PT. Astra Otopart is the largest producer and distributor of automotive components in Indonesia.

The Astra group also leads in motorcycle industry and market in the country. It has PT. Astra Honda Motor (AHM) producing Honda motorcycles in cooperation with Honda Motor Co.,Ltd. In 2004, AHM expanded its motorcycle factory by building a third production unit in Cibitung, Bekasi, West Java, with an investment of US$ 100 million.

Two other production facilities are located in Sunter and Pengangsaan Dua, with a total production capacity of 2 million units. The new plant came on line in October, 2005 with an annual production capacity of 1 million units.

Currently the Astra Group, has a 41.5% share of auto market and 51.5% share of motorcycle market in the country. It has 359 car dealers including 134 dealers fully owned by it and 243 motorcycle dealers including 41 wholly owned dealers.

Heavy equipment

The Astra Group has expanded business to heavy equipment assembling and distribution under PT. United Tractors, which was established in 1972 as a sole agent for heavy equipment. In 2005 it increased its stake to 57.4% in United Tractors.

PT. United Tractors is a sole agent for a number of brands of heavy equipment including KOMATSU, TADANO, BOMAG, JOHN DEERE and NISSAN. Currently United Tractors is he largest supplier of heavy equipment in Indonesia, with a market share of 41%. In this division, a mining contractor subsidiary was established namely PT Pamapersada Nusantara. This company has often been involved in coal mining ventures and has expanded in the past five years.

Information Technology

In 1975, the Astra Group established PT. Astra Graphia, to operate in information technology business. Currently PT. AG has two main business units --Astra Graphia document solution (document office, system business, document consulting and integrated solution, document production system business, document business services, document multi product business, document mobile services), and Astra Graphia information technology solution (Business Consultant telecom industry, Business Consultant Cross Industry Technology and service, Outsourcing).

This company has continued to expand its distribution networks with 19 branch offices, and 53 service points all over the country. Major projects, handled by this company include remote trading automatization for the Jakarta Stock Exchange, and implementation of telecommunication network management system of PT. Satelindo.

Finance

The Astra Group began expansion to the financial sector in 1982 in consumer credit business. In 1992, it formed cooperation with General Electric Capital Corporation. Earlier in 1990, it established a Bank Universal.

After a setback in the wake of the 1997/1998 crisis, the Astra Group restarted its business in the financial sector including in consumer financing. In 2004, PT. Astra International Tbk (PT.AI) in cooperation with Standard Chartered Bank acquired 51% of PT. Bank Permata Tbk. Bank Permata is expected to support its financing firm PT. Federal International Finance (FIF) and PT. Astra Sedaya Finance (ASF). PT. FIF is a financing firm offering financing for motorcycle purchases. It is the largest motorcycle financing firm in the country with 73 branch offices and 195 service points all over the country. In 2003, FIF reported a 58% increase in net income to Rp1.1 trillion with non performing loan of only 1.4%.

PT. Astra Sedaya Finance (ASF) offer to finance car purchases. It is a member of the Astra Credit Company(ACC) , a company group offering financing for car purchases. ACC is designed to contribute to the operation of the Astra group, which is the sole agent not only for Toyota but also for Daihatsu, Isuzu, BMW, Peugeot and Nissan trucks.

The Astra Group has sales division called "Mobil 88" to handle sales of used cars.

The Astra Group also offers to procure cars for the transport of workers service. PT. Serasi Autoraya (SAR) yang, which is wholly owned by Astra, rents cars name d "TRAC--Astra Rent-a-Car. The company started operation in 1990 operating more than 10,000 vehicles. TRAC is the largest car rental in the country. By the end of 2004, its assets were valued at Rp 1.2 trillion with annual income of Rp 600 billion. Its main customers are companies.

Agribusiness

Historical background of PT Astra Agro Lestari

* "PT Astra Agro Lestari Tbk (AAL) was founded in 1981 through PT Pandu Dian Pertiwi a company owned by the Soeryadjaya family, Mr. T.P. Rachmat, Mr. Benny Subianto, Mr. Kiki Sutantyo and Mr. Rahadi Santoso. In 1983, PT Astra International (AI) established an Agribusiness Division, starting with 2000 hectares of cassava plantation which was later converted to rubber (HIM).

* "In 1984, embarked on its oil palm plantation business by acquiring PT Tunggal Perkasa Plantation (TPP).

* "In 1986, established 10,000 hectares of oil palm plantation in Riau, Sumatera under a Government program for private small holders (PIR Trans).

* "In 1988, PT Astra Agro Niaga (AAN) (formerly named PT Suryaraya Cakrawala) and PT Suryaraya Bahtera (SRB) were established as subholding companies of the plantation operations.

* "In 1990, PT Astra International (AI) acquired 20% of issued share capital of PT Astra Agro Niaga (AAN) and 50% of PT Suryaraya Bahtera (SRB).

* "On June 30, 1997 PT Astra Agro Niaga (AAN) and PT Suryaraya Bahtera (SRB) merged to form a holding company called PT Astra Agro Niaga (AAN) which on the 21 August 1997 changed its name to PT Astra Agro Lestari Tbk (AAL).

* "On December 9, 1997 PT Astra Agro Lestari Tbk (AAL) successfully listed its shares on the Jakarta and Surabaya Stock Exchange of 125,800,000 units at a price of Rp. 1,550,- per share.

* "In July 1999, PT Astra Agro Lestari Tbk (AAL) issued Bonus shares of 251,600,000 units thus totaling 1,509,600,000 shares.

* "In March 2000, PT Astra Agro Lestari Tbk (AAL) successfully listed its first Bond issue on the Surabaya Stock Exchange totaling Rp. 500 billion over a 5 year period.

* "In 2004, PT Astra Agro Lestari Tbk (AAL) divested its non-oil palm plantation.

Busines Development of PT AAL

In 2004, AAL sold its non oil palm plantations including rubber and coca plantations to concentrate on oil palm plantations. Currently AAL is the largest producer of CPO in the country. It has 201,412 hectares of oil palm plantations in Sumatra, Kalimantan and Sulawesi. Around 61% of its oil palm trees are aged between 10-14 years or at peak productivity.

In 2005 its production of fresh fruit bunches (FFB) rose to 3.5 million tons from 3.1 million tons in the previous year. Its FFB production per hectare rose to 19.2 ton from 17 tons a year. Seven of 27 plantations have a productivity of more than 95%, 12 plantations with production of 85%-95% of maximum production and 8 plantation with production below 80%. Including plasma estates, AAL has 201,412 hectares of oil palm plantation with tree aged around 11 years on the average.

Its CPO production in 2005 rose to 857,141 tons from 765,172 tons in the previous year. In 2006, AAL targets to chalk up a 12% increase in its CPO production to 950,000 tons. In order to meet the target the company plans to expand plantation by 15,000 hectares. This year, the company sets aside capital expenditure amounting to Rp600 billion to build new CPO processing plants and plantation infrastructure.

The success of AAL in increasing its production is attributable partly to adequate technology and infrastructure. In 2005, AAL built two palm oil processing plant in Central Kalimantan and CPO storage tanks in Bumiharjo, Central Kalimantan. The new processing factories, brought the processing capacity of its plants to 760 tons of FFB/hour.

PT Astra Agro Lestari Tbk is now studying possible expansion to business in castor oil plantation to produce castor oil for biodiesel feedstock as well as in rubber plantation. Development of bio-diesel as an alternative source of energy with palm oil as the basic material, is now in the stage of experiment and is expected to be commercially operational next year.

The bio-diesel production will be offered to mining companies and other users. The factories, therefore, will be built close to consumers. Biodiesel from castor oil will be produced later.

Astra Agro Lestari plans to expand its oil palm plantations from 200,000 hectares at present to 350,000 hectares in the next 7 years. This year 15,000 hectares of new plantation areas will be cultivated in East and Central Kalimantan.

This year, AAL, which in 2004 sold its non oil palm plantations including rubber plantations, plans to open new rubber plantations prompted by the increase in the price of that commodity in the world market. It plans to expand its remaining 3,000 hectares of rubber plantations to 50,000 hectares. The rubber plantations are expected to start contributing to its income after 5 years.

Agribusiness contributed to increase in profit of Astra

Astra's income in the past 2 years has continued to increase. In 2004, its income was recorded at Rp 44.3 trillion, up to Rp 61.1 trillion in 2005. Its net profit was Rp 5.46 trillion in 2005, up from Rp 5.40 trillion in 2004.

Contributing to the increase in its income included its automotive division, financial service subsidiaries, palm oil subsidiary and heavy equipment subsidiaries.

In the first quarter of 2006, Astra's income dropped to Rp 13.01 trillion from Rp 14.34 trillion in the same period last year. Its operating profit also declined from Rp 601 billion to Rp 301 billion on slump in the automotive market as a result of the October oil fuel price hikes.

Contrary to business in the automotive sector, Astra posted an increase in income from its agribusiness division in the first quarter of 2006. In the first quarter of 2006, PT Astra Agro Lestari reported Rp 182.2 billion in net profit , up 10.3% from the same period last year.

The increase in its net profit was attributed partly to 14 rise in its CPO production to 223,000 tons in the first three months of this year from 195,800 tons in the same period last year. In addition the price of CPO rose 6% in the first three months of 2006. This year the company targets to produce 950,000 tons of CPO, up 11.8% from last year. In 2005, its automotive division contributed 69.1% to Astra's income. PT. Toyota Astra Motor was earlier a major contributor to its income from the automotive sector but now the company has been under control of the Japanese principal. Other major contributors to the income of the company group include PT. United Tractors (13.5%), PT. Astra Agro Lestari Tbk (7.8 %) and other subsidiaries.

Conclusion

The success recorded by the Astra Group was partly attributable to its skilled and professional top executives such as Theodore Permadi Rachmat, who succeeded in keeping the Astra Group afloat amid economic crisis. TP. Rachmat joined Astra in 1969. Rini Mariani Sumarno Soewandi also left her mark in the company as a skilled executive. Rini succeeded in completing restructuring the debt of Astra to save it from the devastation of the crisis. The strength of Astra in the automotive business lies in the availability of modern production facilities with large capacity, good reputation in quality, support from financial sector and strong marketing networks and supporting facilities and services including after sales services, workshops and dealers.

Astra's automotive business will depend much on its success in maintaining long term cooperation with car makers including Toyota Motor Corporation, Daihatsu Motor Co.Ltd., Isuzu Motors Ltd., Peugeot SA, Nissan Diesel Motor Co.Ltd. and BMW AG and Honda Motor Co.,Ltd. There are a number of business risks faced by the Astra Group in its automotive business in the future. Change in the government policy in the automotive industry could affect the cooperation agreements with the car principals. Astra has maintained strong market foothold and large share of automotive markets in the country but the government may decide to change its present policy depending on condition in the coming years.

Similarly, its business in heavy equipment will depend much on its cooperation with Komatsu Ltd. It is no possible that Komatsu decide not to renew cooperation with United Tractors. Its business in the agribusiness sector faces a number of risks such as price fluctuations, the use of falsely certified seedlings that could reduce productivity, limited availability of suitable lands, embargo over failure to observe preservation of the environment and forest fires when building oil palm plantations, etc. A decline in the purchasing power of people and inflations are also determinant factors.
Table
Oil palm plantations and CPO production of AAL

 Description 2005 2004

Cultivated oil palm plantation(Ha)
- Productive 183.319 139.987
- Not yet productive 10.447 2.256

Locations of productive plantations
(Ha) 91.566 88.848
- Sumatra 56.440 55.894
- Kalimantan 35.313 37.736
- Sulawesi

Total Production of TBS (Ton) 3.518.364 3.100.014
- Sumatra 1.753.235 1.668.920
- Kalimantan 1.097.089 866.566
- Sulawesi 668.04 564.528

Total production (in ton) of
- CPO 857.141 765.172
- PKO 165.809 146.953
- Palm kernel oil 9.921 9.710
- PKE 14.156 12.691
- Olein 23.280 55.251
- Cooking oil 9.777 18.146
- Stearin 10.755 19.603
- PFAD 1.300 3.117

Source: Annual Report AAL

ASTRA GROUP

Holding Company: ASTRA INTERNASIONAL Tbk, PT

Address: JI. Gaya Motor Raya No. 8 Sunter II
 Jakarta 14330

Phone (s): (021) 652 2555

Fax.: (021) 651 2058, 651 2059

Homepage: WWW.astra.co.id

Management: President Commisioner: Mr. Budi Setiadharma
 President Director: Mr.Michael D. Ruslim

Number of companies: 210

Financial Highlights
(in Rp million)

Total Astra 2005 2004 2003 2002 2001
(Consolidated)

Statement of
Income

Net revenue 61,172 44,345 31,513 30,685 30,123
Gross profit 13,723 10,313 7,679 6,625 5,657
Operating profit 6,414 4,858 3,398 2,811 2,624
EBITDA * 8,221 6,098 4,296 3,704 3,441
Net Income/loss 5,457 5,406 4,422 3,637 845

Balance sheet

Total assets 46,986 39,145 27,404 26,186 26,574
Current asset 16,171 13,577 9,221 10,469 10,173
Fixed assets ** 11,794 8,803 6,338 6,680 7,335
Current liabilities 14,603 13,235 7,733 7,983 10,355
Total borrowing 12,338 10,460 8,704 11,954 16,506
Total equity 20,424 16,485 11,711 6,499 2,567
Total equity & 24,231 19,720 13,506 8,921 4,550
 minority interest

Ratio analysis &
other information

Return on assets 13% 16% 17% 13% 3%
Return on equity 30% 38% 49% 74% 46%
Gross profit margin 22% 24% 24% 22% 19%
Operating profit 10% 11% 11% 9% 9%
 margin
Current ratio 1.1 1.0 1.2 1.3 1.0
Issued share (in 4,048 4,048 4,035 2,608 2,538
 million)
*** Net 1,348 1,335 1,100 1,024 244
 earning/(losses)
 per share (Rp)
**** Net asset 5,045 4,072 2,902 4,492 1,011
 value per share
 (Rp)
Interim cash 100 100 50 0 0
 devidend per share
Remaining cash 340 To be 170 0 0
 devidend per share announced
 (Rp)
**** Net debt to 0.1 Net cash 0.1 0.9 4.4
 equity ratio (x)

Note: *) earning before interest tax depreciation and amortization

**) Includes assets not used in operation

***) Net earning/(losses) per share is calculated based on the weight
average number of ordinary share out standing adjusted for any share
issuance

****) Net assets value per share is calculated based on the number of
ordinary share outstanding at every year-end

Source: Annual report PT Astra International Tbk.
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Title Annotation:COMPANY PROFILE
Publication:Indonesian Commercial Newsletter
Article Type:Company overview
Geographic Code:1USA
Date:May 1, 2006
Words:3531
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