WOM books higher revenues, but net profits decline

The Jakarta Post ,  Jakarta   |  Sat, 06/16/2007 9:31 AM  |  Business

The Jakarta Post, Jakarta

PT Wahana Ottomitra Multiartha (WOM) Finance, which specializes in financing motorcycle purchases, suffered an 8 percent drop in net profits in the first quarter ending March, despite booking higher revenues.

WOM had earnings of Rp 298 billion (US$32.8 million) in the first three months of this year, up from Rp 215 billion in 2006, but its net profit declined to Rp 23 billion from Rp 25 billion previously.

The company's deputy president director, Suwando Wiratno, said Thursday that the drop in net profit was mainly caused by the higher lending costs.

""Our lending costs remained high because the banks continued to impose high lending rates despite the decline in Bank Indonesia's key interest rate. This contributed to the decrease in our net profit,"" he said.

In the first quarter of the year, WOM financed the purchase of 87,717 motorcycles, up 46 percent from 60,003 motorcycles last year. Company spending for this purpose rose by 50 percent to Rp 887 billion from Rp 589 billion previously.

As of May, the publicly listed firm had financed the purchase of around 160,000 motorcycles, and is aiming for 200,000 by the end of the first semester.

""And we expect the number to continue increasing, especially in the second semester. We believe we can finance the purchase of up to 450,000 motorcycles by the end of 2007,"" said Suwandi.

This means that WOM is expecting a 12 percent increase over last year's figure of 400,946 motorcycle purchases financed by the company. To reach its target, WOM will provide a set aside Rp 4.5 trillion, up 12 percent from Rp 4 trillion last year. It raised Rp 1 trillion from a bond issue in May, while the remaining Rp 3.5 trillion will be sourced from its cash reserves or bank loans.

Among the banks that will provide the loans is Bank Internasional Indonesia (BII), which acquired 67 percent of WOM in 2005. According to Benny, BII is committed itself to providing about Rp 2.5 trillion, or 40 percent of the Rp 3.5 trillion needed by WOM.

According to the chairman of the Indonesian Automotive Manufacturers Association (Gaikindo), Bambang Trisulo, as quoted by Republika daily, more than 80 percent of motorcycle purchases in Indonesia are financed by financing firms.

In the first quarter of 2007, the number of motorcycles sold amounted to 1,370,276, which means that WOM controlled around 6 percent of the market during the period. (11)

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