Amid global pressures and a year-on-year decline in performance, state-owned PT Krakatau Steel (Persero) Tbk (KRAS) showed promising signs of financial recovery in the fourth quarter of 2024. Despite recording another net loss for the year, recent figures signal a potential turnaround and improving fundamentals heading into 2025.
The 2024 Annual Financial Report noted revenue of USD 954.59 million (IDR 15.42 trillion), down 34.4% year-on-year due to the full-year shutdown of the Hot Strip Mill 1 (HSM 1) facility. Nevertheless, Krakatau Steel managed to post a gross profit of USD 106.94 million (IDR 1.73 trillion) and a positive EBITDA of USD 6.63 million (IDR 107.17 billion), demonstrating that operations remained under control.
Significantly, the company improved its gross profit margin by 344 basis points compared to the previous year—an important indicator of operational efficiency despite revenue pressures. The company also delivered a strong Q4 performance, though it was not prominently highlighted in its official disclosures.
“Unfortunately, Krakatau Steel’s positive performance in Q4 2024 wasn’t explicitly emphasized, when in fact it could signal a strong rebound in 2025,” said Marolop Alfred Nainggolan, Managing Partner at PT Koneksi Kapital Indonesia.
External Pressures and Financial Burden
Krakatau Steel posted a net loss of USD 148.42 million (IDR 2.4 trillion) in 2024, primarily due to high financial expenses amounting to USD 153.65 million (IDR 2.48 trillion) and losses from associated entities and joint ventures totaling USD 49.68 million (IDR 802.66 billion). These financial pressures were further exacerbated by the weakening rupiah and global macroeconomic challenges, including the negative impact of U.S. tariff wars on steel exports.
“The KRAS stock price, which at one point fell to IDR 79 per share, reflected not just the losses, but also market sentiment that was even more pessimistic than during the prolonged loss-making period between 2012 and 2019,” Alfred emphasized.
Even so, he believes recovery remains within reach, especially with cost-efficiency gains already evident in 2024 and the company’s potential to ramp up production in 2025.
HSM 1 Restarts, Production Set to Surge
A key driver of optimism is the planned restart of the HSM 1 plant in 2025, with an annual production capacity of up to 2.4 million tons of Hot Rolled Coil (HRC). The company had operated without this strategic plant throughout 2024, so its reopening is expected to significantly boost production, strengthening both cash flow and revenue streams.
Diversification Strategy to Support Stability
Krakatau Steel’s transformation strategy extends beyond the steel business. The company is actively expanding other business lines through subholdings in industrial estates, port operations, logistics, energy, and industrial water management. This diversification approach forms a key pillar in the company’s long-term plan to build more stable and recurring income sources.
