Wijaya Karya's Profit Drops 65.3 Percent In The First Quarter Of 2020

Illustration. (Photo: Wijaya Karya)

JAKARTA - The state-owned construction company, PT Wijaya Karya (Persero) Tbk (WIKA) posted a profit attributable to the owner of the parent company of IDR 99.21 billion in the first quarter of 2020. This achievement dropped 65.3 percent compared to the first quarter of 2019 which recorded a net profit of IDR 285.89 billion.

Quoted from WIKA's financial report published in the disclosure of information on the Indonesia Stock Exchange (IDX), it was stated that the decline in profit was caused by a number of factors, ranging from decreased income to increased expenses. WIKA was also affected by the COVID-19 outbreak.

As of the first quarter of 2020, it shows that WIKA's revenue has decreased by 35.44 percent to IDR 4.19 trillion. The majority of revenue was contributed from the infrastructure and building sectors, namely Rp2.68 trillion.

Meanwhile, the energy & industrial plant sector contributed Rp.667.64 billion, the industrial sector Rp.666.22 billion, and the realty & property sector Rp.181.21 billion.

The pressure from the decline in income was getting heavier with an increase in operating expenses by 12.62 percent to Rp194.67 billion. The main cause was an increase in general and administrative expenses by 13.33 percent to IDR192.35 billion.

In terms of non-operating performance, the construction BUMN's interest income also decreased by 28.8 percent, while the burden of funding increased by 27.41 percent. Impairment charges for financial instruments also exceed the recoveries in value of financial instruments.

There are only two non-operating income accounts that have increased. First, joint venture profits rose 23.74 percent to IDR154.05 billion. Second, foreign exchange gain which increased more than ten times to Rp63.53 billion.

However, this did not prevent the company from decreasing net profit by 55.36 percent to IDR 152.36 billion. Meanwhile, profit attributable to owners of the parent company decreased 65.3 percent to IDR99.23 billion.

Management Optimism

President Director of Wijaya Karya Agung Budi Waskito said his party was still assessing the company's achievements positively. He said WIKA's achievements in the first three months reflected the company's ability to maintain its business operations even though it was faced with a number of challenges due to the COVID-19 outbreak.

He said, the company's financial condition is still healthy. This was reflected in the gross gearing and net gearing ratios of 1.04x and 0.59x, respectively. This position is still much lower than the covenant limit of 2.50x.

According to Agung, a healthy financial ratio is a good first step for the company in preparation to restore the rhythm of infrastructure development that was hampered by the impact of COVID-19.

"This is in line with the implementation of the transition from large-scale social restrictions (PSBB) to the implementation of the new normal," said Agung.

Agung explained that with the provision of an order book which until April reached Rp. 80.68 trillion, WIKA will focus production on several projects originating from BUMN and their affiliates, projects from the government.

According to him, these projects have better payment schemes than other projects. This condition is considered to be helpful in maintaining operational stability and maintaining financial health.

He said, WIKA has also prepared protocols that regulate employee activities. Similar protocols have been prepared for activities involving other stakeholders, whether in offices, projects or factories.

He said that for activities that require direct interaction, body temperature checking and physical restrictions will be applied. Meanwhile, other activities can be done virtually.

WIKA also seeks to optimize the use of digital technology. Currently, the digitization process that is taking place at WIKA has changed the way of working from the planning, development process to project monitoring and evaluation.

"Its effectiveness is starting to be seen from the reduced physical presence and quality aspects that continue to be produced in accordance with company standards," he said.