GGRP Unveils Strategic Roadmap to Produce the Lowest Carbon Emission Steel in Asia
Cikarang Barat, December 6, 2024 – PT Gunung Raja Paksi Tbk (GGRP), one of Indonesia's largest private steel producers, has revealed its strategy to become Asia's leading low-carbon steel manufacturer. Through its Incidental Public Expose (PUBEX), the company also reassured shareholders about its financial stability following recent stock price volatility.
Solid Financial Performance Amid Market Volatility
As of September 2024, GGRP reported solid financial performance despite market fluctuations. The company recorded a significant increase in EBITDA from continuing operations, reaching USD 50.1 million, reflecting a 54.6% year-on-year growth. Additionally, profit before tax from continuing operations rose to USD 29.6 million, an increase of 553.2%, while net profit from continuing operations soared by 780.8% to USD 31 million compared to the same period last year.
The company also successfully reduced its liabilities by 58.4% as of September 2024, while equity grew by 5.6%. GGRP's financial resilience is evident from its strong debt ratios, with a Debt to Equity Ratio (DER) of 0.13x and a Debt Service Coverage Ratio (DSCR) of 5.74x, highlighting its robust capacity to meet financial obligations.
Positioning as a Low-Carbon Steel Pioneer
The global steel industry must reduce carbon emissions by over two-thirds (67%) to achieve net-zero by 2050. To meet this goal, the share of steel produced using Electric Arc Furnace (EAF) technology is projected to rise dramatically from 28% to 64% by 2050. GGRP’s role as a low-carbon steel pioneer positions the company strongly to lead the new steel economy while delivering maximum financial returns to its shareholders.
GGRP has outlined its readiness to become one of the most technologically advanced, sustainable, and profitable steel producers in Asia by implementing the following measures:
- Advancing Production Technology: GGRP will modify its existing Electric Arc Furnace (EAF) technology by integrating side-charging systems, potentially reducing energy consumption by 10% to 20%. Additionally, the company plans to adopt thin slab casting technology and new rolling mills to produce premium-quality, high-value low-carbon steel for downstream applications.
- Optimizing Scrap Utilization as Raw Material: GGRP aims to secure high-quality scrap through an AI-based grading system, long-term agreements with quality scrap suppliers, and strategic investments in scrapyards to ensure consistent quality and supply of scrap materials.
- Expanding Export Markets for Low-Carbon Steel Plates: The company will prioritize the production of low-carbon steel plates at its Plate Steckel Mill (PSM) facility, focusing on environmentally certified plates to meet the growing demand in export markets, including long-term market needs.
- Tracking Emissions Across Products: GGRP will enhance the digitalization and automation of its facilities to ensure end-to-end traceability of emissions for every product.
Aligned with the company's Net Zero strategy, GGRP’s initiatives are designed to meet the rising demand for premium and specialty steel products in critical industries driving the global energy transition, including renewable energy infrastructure, sustainable transportation solutions, and durable construction.
“Our transformation is more than just technological upgrades; it positions GGRP as a leader in the global energy transition,” said Roymond Wong, Vice President and Director of Finance at GGRP. “Steelmakers that fail to adapt to this new steel economy will fall behind. We are committed to producing high-value steel that is also environmentally responsible, ensuring our competitiveness in rapidly evolving markets. Our vision is to create steel that supports the global energy transition while minimizing environmental impact,” Roymond added.
“This transformation will enable GGRP to meet the growing demand for premium low-carbon steel products while contributing to Indonesia’s Net Zero emission target by 2060,” he concluded.
Strengthening Financial Resilience for the New Steel Economy
GGRP’s transformation into a low-carbon steel leader is projected to deliver long-term value to shareholders and ensure its competitiveness in global markets, especially with the introduction of carbon taxes and carbon trading mechanisms. During PUBEX, GGRP assured stakeholders of its strong financial health, innovation-driven capabilities, and unwavering commitment to sustainable growth amidst market shifts.
“These strategic initiatives will reinforce GGRP’s leadership in the global steel industry and create lasting value for all our stakeholders,” said Fedaus, President Director of GGRP. “Together, we are not just shaping the future of steel; we are pioneering a sustainable and prosperous future—where innovation and environmental responsibility drive enduring growth for generations to come.”
The company clarified that the recent stock price fluctuations were due to a capital reduction initiative approved during the Extraordinary General Meeting of Shareholders on July 26, 2024. This reduction lowered the nominal value of GGRP shares from IDR 500 to IDR 140 per share, with the difference returned to shareholders on November 8, 2024. GGRP emphasized that this adjustment does not reflect any changes in its financial performance, nor are there any material events or information affecting its business continuity.
“This capital reduction reflects our commitment to delivering direct returns to shareholders while laying a strong foundation for our transformation journey. We view this as a natural market response and remain focused on creating long-term value,” Fedaus concluded.