Gajah Tunggal 1H09 Sales Revenue Declines in Persistently Challenging Environment

As the global tire market remained depressed and the domestic market saw little growth, PT Gajah Tunggal Tbk’s net sales decreased 2.9% to Rp 3,781 billion in 1H09 compared to Rp 3,894 in the same period last year. Overall tire sales volumes in 1H09 were down significantly year on year, with particular steep volume declines in the 4-wheel tire export segments.

Gross margin 1H09 was stable at 15.9% compared to 1H08, although there was considerable improvement in 2Q09 gross margin caused by declining raw material prices, as the company managed to reduce its higher cost inventory. Nonetheless, 1H09 operating margin retracted to 6.4% from 9.5% in 1H08 since selling expenses rose significantly as a result of programs to support our sales, an indication of the difficult operating environment. Consequently, EBITDA in the first half of 2009 reached USD 37 million compared to USD 57 million in 1H08.

The Rupiah appreciation against the US Dollar in the second quarter of 2009 reversed a large translational foreign exchange loss made by the Company in 1Q09, when the Rupiah depreciated severely against the US Dollar. Partly as a result of this, net income turned into positive territory again, totaling Rp 145 billion in 1H09.