Publicly listed heavy machinery distributor PT Intraco Penta Tbk (INTA) is allocating IDR 84 billion (US$ 5.7 million) Capital expenditure (Capex) for 2023 for the procurement and modernization of equipments.
Established in 1991, Intraco operates in heavy equipment, mining and energy industries. The company focuses on the distribution, rental and services of heavy equipment, as well as the trading of mining and energy products. Since its operation, the company has grown significantly and has become one of the leading companies in the heavy equipment and mining industry in Indonesia. As of 2021, the company has become one of the largest heavy equipment providers in the country.
Focus on fleet modernization and procurementÂ
The company’s 2023 Capex is higher than its 2022 Capex of IDR 52.53 billion. Intraco believes the increase in Capex and the control of operational costs will support the rising of heavy equipment sales. It positively impacts the company’s financial performance in 2023. Despite a recession threat, the company is optimistic to leverage the high demand for coal and nickel to achieve its targets. Intraco aims to drive growth across its four business lines.
“Most of the Capex will be allocated for purchasing heavy equipment and the modernization of the rental fleet as well as developing enterprise resource planning (ERP) software,” said Intraco’s Corporate Secretary Astri Duhita Sari.
The company is also targeting sales of IDR 1.2 trillion for 2023, as it looks to capitalize on a projected increase in heavy equipment sales. The main drivers of this increase come from the coal and nickel mining sectors and the plantation and infrastructure projects.
“By strengthening relationships with principals and focusing on priority customers, Intraco will try to optimize all resources to produce positive performance in 2023,” CEO Petrus Halim said in a press statement on January 25, 2023.
Growth target of 86%
The company targets 86% year-on-year growth in 2023. This aligns with the planned business shift of subsidiary PT Intan Baruprana Tbk (IBFN), which will become a distributor of commercial transportation equipment. Intraco also discusses strategies for becoming a leading and competent player in the heavy equipment sector.
“At this moment, we gathered all leaders from all branches in Indonesia to jointly develop and commit to a strategy for achieving targets so that INTA Group grows 86% from the previous year,” said Halim.
Intraco plans to maximize sales of heavy equipment from LiuGong, Sinotruk, Bobcat, Tata and Doosan, as well as push sales of Techking Tire and Undercarriage Kotrack aftermarket products. The company also plans to strengthen relationships with its principals and enhance customer intimacy and brand awareness.
As a provider of heavy equipment, construction and support equipment, fabrication and infrastructure, and power generation equipment, Intraco recorded sales of IDR 497.16 billion in Q3 2022, a 12.01% increase from the same period in 2021, which was IDR 443.78 billion.
Despite a 2.4% decrease in assets in 2022, totaling IDR 2.38 trillion, compared to IDR 2.44 trillion the previous year, Intraco is optimistic about the future. The company attributes this decrease to the decrease in assets value due to the depreciation.
Risks in heavy machinery industry
There are several types of risks that companies and operators need to be aware of and take measures to mitigate. These include:
- Operational risks: These are risks associated with the operation of heavy machineries, such as equipment failure, malfunctions and accidents.
- Safety risks: These are risks related to the safety of workers and others in the vicinity of the machinery, such as injuries and fatalities.
- Financial risks: These are risks related to the financial performance of the company, such as cost overruns, delays, and lost revenue.
- Environmental risks: These are risks related to the impact of the company’s operations on the environment, such as pollution and destruction of natural habitats.
- Compliance risks: These are risks related to the company’s compliance with laws and regulations, such as fines and penalties for non-compliance.
Companies in heavy machinery industry must take steps to identify and assess these risks and implement strategies to manage and mitigate them. This can include implementing safety protocols, training workers, investing in new technologies, and implementing strict compliance programs.
