Hutama Karya seeks 30 percent rise in new contracts

The Jakarta Post, Jakarta | January 11 2016 | 5:45 PM


State-run construction company Hutama Karya is expecting to see an increase of over 30 percent in new contracts this year as it hopes for better performance, particularly after a managerial transformation.

Hutama Karya president director I Gusti Ngurah Putra said the company was looking to book Rp 12 trillion (US$861.96 million) of new contracts this year, a 33 percent increase compared to new contracts it secured last year.

The 2016 growth target is significant given that the company’s new contracts in 2015 remained flat from the previous year at Rp 9 trillion.

“When determining our work plan, we decided to prioritize the quality of contacts over quantity. This means we could not just take random contracts,” Putra said.

Among the contracts Hutama Karya will work on this year are a joint operation for the Pulau Balang bridge — which will stretch 1.7 kilometers from Balikpapan to Penajam Paser Utara in Kalimantan — worth Rp 1.7 trillion.

Other projects are a double-double track railway project in Manggarai, Jakarta, worth Rp 1.3 trillion, as well as a Soekarno-Hatta International Airport project in Tangerang, Banten, worth Rp 800 billion.

“I’ve only been with this company for a year, there has been a managerial change and our first task is to rescue and stabilize [the company] before aiming for growth. We hope the growth will not only be in new contracts but also in our revenue and profitability,” Putra added.

With the expected growth in new contracts, he said that Hutama Karya hoped to pocket Rp 6.3 trillion in revenue this year, up by around 14.54 percent compared to Rp 5.5 trillion last year. As for net profits, the company seeks to book around a 25 percent increase in net profits to Rp 300 billion, from Rp 240 billion it generated in 2015.

The company saw its revenue contract slightly last year by 3.8 percent from Rp 5.72 trillion in 2014, whereas its net profits in 2015 skyrocketed by around 67 percent from Rp 144 billion in the previous year.

Putra said his company expected its new contracts to consist equally of government-funded projects and other projects. The company also expected to see more large infrastructure projects in its portfolio.

Construction consultant BCI Asia projected the overall construction market would face a slight decline this year on the back of economic slowdown, but emphasized a significant increase in large infrastructure and civil works as a result of huge power plant projects. 

According to BCI Asia’s data, the total value of Indonesia’s construction work was expected to decline slightly by 2 percent, affected by a projected downturn in the building sector, which is predicted to fall by around 15 percent this year.

Civil construction work, however, was expected to increase further by 14 percent to Rp 201.04 trillion, with the utilities sector the biggest contributor at 52 percent of the total figure. 

Hutama Karya, as previously reported, has been appointed to lead the construction of the trans-Sumatra mega project, which will connect cities on Sumatra’s eastern shore via a 2,700-kilometer toll road.

The company has been struggling to finance the first stage of the toll road, which comprises eight sections, spanning 644 kilometers, with investments estimated to reach Rp 82.9 trillion, according to Hutama Karya data.


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