Krakatau Steel's Profit In The First Quarter Of 2020 Is Considered Due To Foreign Exchange Gain And Asset Sales

Illustration. (Photo: Krakatau Steel)

JAKARTA - DPR Commission VII legislators have spoken out in response to reports from PT Krakatau Steel (Persero) Tbk claiming to have recorded a net profit of US $ 74.1 million or equivalent to Rp1.07 trillion (exchange rate of Rp14,500) in the first quarter of 2020.

According to Deputy Chairman of Commission VII of the DPR Eddy Soeparno, the claim for profits of the issuer coded as KRAS shares was actually helped by foreign exchange gains and the sale of company assets.

"If you look at the financial statements, Krakatau Steel could make a profit in the first quarter of 2020 because it recorded a foreign exchange gain of 114 million US dollars or equivalent to Rp1.65 trillion and the sale of assets in the form of inventory worth almost 34 million US dollars or nearly Rp 500 billion. On the other hand, Krakatau Steel's sales have fallen by almost 35 percent, "explained Eddy in a written statement received by VOI , Sunday, May 31.

Eddy, who is also the Secretary General of the DPP PAN, explained that the company's real performance is still losing money. This is because if the profit of IDR 1.07 trillion is reduced by foreign exchange gains and asset sales, Krakatau Steel will still lose around IDR 550 billion.

"This is a picture of the real performance of Krakatau Steel," said Eddy.

For your information, foreign exchange gain or loss is one of the elements that affect company profits. Exchange rate differences are obtained from the grace period between the time of transaction of a company and the time of payment during which the rupiah exchange rate also changes.

Eddy admits that there is cost efficiency in the operation and production of Krakatau Steel, but the amount is not comparable to the benefits obtained from non-operating profits.

"Indeed, we appreciate that there is cost efficiency in operations and production, but the nominal value is not comparable to the value of non-operating profits in the form of exchange differences and asset sales," said the man who once served as Director of Investment Banking at Merrill Lynch for Asia Pacific.

Eddy asked Krakatau Steel and its shareholders to anticipate the company's losses that would occur due to the COVID-19 disaster.

"In the future, Krakatau Steel's performance is expected to deteriorate, in line with the national economy which is battered by COVID-19. The construction and oil and gas industry, which are major consumers of KS, have practically died out this year," he said.

However, he continued, because Krakatau Steel is one of the national strategic industries with such a large investment and absorbs a significant workforce, the government will certainly provide support so that Krakatau Steel does not collapse.