SAMKO TIMBER CEO Aris Sunarko says his company is a turnaround story -- after all it had posted net profit attributable to shareholders of Rp51.9 billion (S$7 million) in the 1H2012 which surpassed the net profit for full year 2011.
Samko is one of the world’s top 5 manufacturers of tropical-hardwood plywood, making it a unique stock on the Singapore Exchange which gives investors exposure to the booming Indonesian economy.
But it had been plagued by losses from a timber producer subsidiary, Sumalindo, from 2008 to 2010.
After reducing its stake in Sumalindo from 51.61% to 31.25% in Feb 2010, Samko started showing profits.
”We are into our sixth consecutive quarter of profit,” said Mr Sunarko during a teleconference from Jakarta with NextInsight on Tuesday.
Indonesia contributes more than 75% to Samko’s group revenue (1H2012: 77.1%) and 1H2012 domestic sales grew 13.2% year-on-year.
Pent-up demand for mass-market housing is driving demand for Samko’s plywood products, as wood is the primary material for homes in the developing nation.
With its population of 250 million, Indonesia is the largest market in the Southeast Asian growth story that is attracting investment managers.
Samko's export sales volume remains strong. Export sales contributed 22.9% to group revenue in 1H2012 and grew 21.3%. It exports mainly to Japan, and also to South Korea, Singapore, Malaysia and Thailand.
”The European sovereign debt crisis has not affected us,” said Mr Ho Chee Mun, who is the CEO's personal assistant.
What’s exciting to the Samko Timber's management is the positive customer feedback on its trial shipments for 3 new products.
From next year, they are expected to boost the company's revenue and profits, said Mr Sunarko who gave us a rundown on these products.
NEW PRODUCT #1: Recycled high performance outdoor wood
The Samko growth story
Hear it first-hand -- Mr Sunarko will explain the potential of Samko’s new products and its next wave of growth -- on Saturday, October 20.
You will also get to watch a video of how Samko assembles and disassembles its prefab housing.
Seats are limited to about 20, so register as soon as possible. Your registration is confirmed when we send you an acknowledgement.
Venue: 4 Robinson Road (House of Eden),
Date: Sat, 20 Oct 2012
Lunch is provided
“Heveatech Decking” is Samko’s proprietary brand with proprietary in-house technology that enhances durability and performance.
It is an environmentally friendly wood that is felled from Hevea rubber trees that have exhausted their 25 to 30 years of latex production lifespan.
It is relatively cheap raw material as it is reclaimed from ‘waste rubber wood’.
The Hevea is a species with high-density grain and easy machining characteristics like expensive teakwood. Hardy and beautiful, it is the preferred choice of architects for outdoor wooden flooring.
Trial shipments of this high-end product have been exported to 12 countries, said Mr Sunarko. Feedback has been most encouraging and the management expects positive revenue contribution from FY2013.
NEW PRODUCT #2: Rooftop structures
Samko has been selling Laminated Veneer Lumber (LVL) and Laminated Veneer Boards (LVB) for door and window frames.
A new product it is now offering is wood trusses for rooftop structures, a substitute product for steel roof trusses.
NEW PRODUCT #3: Pre-fab houses
Samko’s general plywood is used in a wide range of housing solutions, including cladding, partitions, door covers and concrete forms.
Since it is already producing so many components of Indonesian housing, it decided to come up with an innovative solution for housing needs in rural locations: prefab housing.
All it needs to add are wooden panel walls, ceramic or timber flooring, plumbing systems and toilets.
Prefab housing is a boon for mining companies and palm oil companies as it can be easily dismantled, relocated and reassembled when a project reaches end-of-life.
"The beauty of prefab housing is its mobility," said Mr Ho.
So far, Samko has secured some trial orders. These include fully prefabricated homes for companies which need housing for workers as well as partially prefabricated housing units for a property developer.
To improve profit margins, Samko has expanded its network of stores for its plywood products.
It is currently operating 32 stores in 20 cities in Java and some in Sumatra.
”Compared to selling to stockists and third-party distributors, operating our own retail outlets keeps us abreast with market intelligence such as pricing and demand trends,” said Mr Sunarko.
The company has been exporting truck bodies to truck manufacturers in Japan and wants to add this to its in-store product range. The truck parts include flat decks, trunks, side panels and high-finish interiors.
”In Indonesia, people buy naked truck bodies and have it assembled by a truck body assembler,” explained Mr Sunarko.
Another export product it wants to eventually carry in its self-operated retail stores is “Heveatech Decking”.
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Watch the above video (9 minute 29 seconds) on Samko Timber's operations and business philosophy.