JAKARTA: PT Multistrada Arah Sarana Tbk (MASA) increases selling price of its products for export market as much as 11% to 15%, starting next month, to maintain the companys gross margin.Currently, 75% products of the company producing tires with brands Achilles, Corsa, and Strada are for export markets and the rest are for local market.Even Go, Head of Investor Relations Multistrada, said that the increase in selling prices of tire products is one strategy to anticipate the rise of raw materials, such as natural rubber, synthetic rubber and steel wire.Selling prices of car and motorcycle tires in local market has increased since the first week of January 2011 by 11% to 15%, while price of some tire products in export market has risen 7.5% since November 2010, he told Bisnis yesterday.Even said tire price increase at export market will be done gradually, depending on customers.As selling price increase, we expect to maintain gross margin at 22%, like in 2009 and almost 22% last year, he said. Higher selling prices of car tires only apply to 13-inch to 24-inch tires.Multistrada is boosting the capacity of tire production. Early December 2010, production capacity of car and motorcycle tires reached 17,500 units and 8,000 units.Once the first stage of capacity expansion is completed, car tire production will increase by 28.57% to 22,500 units a day in the first semester of 2011, compared to 16,000 units a day currently.After the second stage is finished, car tire production will be boosted to 28,500 units a day by the end of this year.Besides raising the sale price, we also impose the mixed product management since every product size has different margin. We also set up particular product allocation, said Even.50% growthBased on research by OSK Securities released on December 30, 2010, Multistrada is believed to keep its gross margin this year near the current level, amidst the uprising trend of rubber and crude oil prices.Referring to the companys track record, Multistrada is able to maintain the gross margin at 20%-22% per year.The tire producer even successfully increased the gross margin amidst the raw material jump since it can overcome the expense hike by depending on its ultra high car tire unit.Adding to that, backed by the production expansion, Multistrada targets to record 50% of revenue growth this year, reaching IDR3.1 trillion compared to last years estimation at IDR2 trillion.The company also expects to raise its net income by 50% to IDR240-250 billion in 2010, compared to last years projection of IDR160-IDR165 billion, which is lower than OSKs estimation. (T04/NOM)
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