Krakatau Steel Successfully Earns IDR 609 Billion Profit After Years Of Loss, Erick Thohir Asks Management Not To Be Satisfied

Minister of SOEs, Erick Thohir. (Photo: Doc. Ministry of SOEs)

JAKARTA - PT Krakatau Steel (Persero) Tbk managed to make a profit this year. As of July 2021, the company made a profit of IDR 609 billion after 8 years of losses. Seeing the gains obtained, the Minister of SOEs, Erick Thohir, increased so that the management of the state-owned company would not be complacent.

Furthermore, Erick said that the attitude of not being complacent with the results obtained is important for any state-owned company and must continue to improve performance.

"So far, Krakatau Steel has lost for the last eight years, now it has made a profit," Erick told Jokowi during the inauguration ceremony of the Krakatau Steel factory in Cilegon, Banten, Tuesday, September 21.

Erick explained that the profit earned by the issuer codenamed KRAS was the result of the restructuring policy implemented by the Ministry of SOEs. This restructuring consists of three stages, two of which have been completed.

In the presence of President Joko Widodo (Jokowi), Erick also reported to Jokowi that the restructuring was not only applied to Krakatau Steel, but also other SOEs, such as PT Perkebunan Nusantara (Persero) aka PTPN. The SOE in the plantation sector has also succeeded in reversing the financial condition from loss to profit.

According to Erick's notes, PTPN managed to collect a profit of IDR 2.3 trillion until the end of August 2021. In fact, the company originally targeted its financial condition this year to lose at least IDR 1.4 trillion because in the previous year it still recorded losses.

"This PTPN's sales have increased by 37 percent, from this year's target of IDR 1.4 trillion. Last August I checked, Mr. and I make sure, that the profit is already IDR 2.3 trillion," he said.

Krakatau Steel's performance boosted by exports

President Director of Krakatau Steel, Silmy Karim said sales performance until July 2021 also jumped 44.1 percent compared to the same period in 2020 or year on year (yoy). The sales performance was greatly helped by the increasing export performance.

Such as hot-rolled coil and hot rolled plate products are the main products of Krakatau Steel which are exported to various countries in Europe, including Portugal, Spain, Germany, Italy, Belgium, and also to Malaysia and Australia.

In addition, the company also implemented efficiency and succeeded in reducing fixed costs by 19 percent and variable costs by 11 percent until July 2021. In 2020, the company also carried out efficiency, where operational costs were reduced by 41 percent.

Not only that, but the company also restructured its debt in 2020 which at that time became the largest restructuring in Indonesia with a total of IDR 29 trillion.

With this effort, the 9-year debt interest expense of IDR 12.3 trillion was successfully reduced to IDR 6.7 trillion. Thus, the total savings obtained reached IDR 9.9 trillion. Meanwhile, in the fourth quarter of 2021, Krakatau Steel's debt restructuring will decrease by IDR 2.9 trillion. The restructuring was carried out in terms of organization and human resources, including the transformation of the corporate culture.