The company may hire an adviser this month to identify potential acquisitions and plan a three-year overseas expansion strategy, President Director Dwi Soetjipto said in an interview in Jakarta, declining to give details.

“It’s not easy to build a new brand” in a new market, so buying a company would be easier, Soetjipto, 53, said in an interview yesterday. “This is a way to reduce revenue and production risks.”

An overseas acquisition may help Gresik, which relies on local companies for about 95 percent of revenue, to raise exports to neighboring countries in Southeast Asia. The company, whose domestic market share is almost equal to the size of its next two largest rivals, is betting economic stimulus packages in Thailand and Malaysia will spur investments in roads, ports and bridges.

“Among Indonesia’s three biggest cement makers, Gresik is the most ready for overseas expansion because of its capacity,” said Irvin Patmadiwiria, who helps manage about $69 million at PT Lautandhana Investment Management in Jakarta. “Still, we must be cautious whether exporting is a better move” than focusing on the domestic market.

Semen Gresik, based in the city of Gresik in East Java, held a 44 percent share of the Indonesian market in 2008, compared with PT Indocement Tunggal Prakarsa’s 32 percent and PT Holcim Indonesia’s 14 percent.

The company had a cash balance, including short-term investments, of 3.3 trillion rupiah ($297 million) as of Sept. 30, and a total debt of 73 billion rupiah.

Funding Plans

Gresik also plans to invest a separate $1.25 billion by 2014 to build two local cement factories and expand existing units, Soetjipto said. Gresik will borrow about $700 million and the rest from cash from operations to fund its expansion, according to the company.

Shares of Gresik, the first state-run company to sell stock to the public in 1991, rose 2.1 percent to 3,575 rupiah today, its first gain in five days. The stock has fallen 14 percent since the year started, compared with a 0.6 percent gain in the Jakarta Composite index on concern a slowing economy will reduce earnings.

Indonesia’s domestic cement sales growth may slow to 3 percent this year after surging 11.5 percent in 2008, the fastest since at least 2002, Soetjipto said.

Demand for cement in Malaysia, Indonesia and Vietnam, members of the Association of Southeast Asian Nations, may rise more than 7 percent annually through 2012, compared with an estimated 5.3 percent globally, according to a study by Freedonia Group published in Cement Americas magazine in July.

Thailand plans to invest 300 billion baht ($8.6 billion) this month to boost the economy, while Malaysia is working on a second stimulus package after announcing a 7 billion ringgit ($1.9 billion) spending plan in November.

New Factories

Semen Gresik’s plants in Java, Indarung in West Sumatra and Pangkep in South Sulawesi are running at their full 18-million ton annual capacity and new factories to be located Java and Sulawesi will add a combined 5 million tons, Soetjipto said.

An additional 1 million tons of capacity will be available after changing equipment in plants, he said. Gresik is also studying the possibility of building a third new 2.5 million ton factory in Sumatra.

“We need expansion to maintain our leadership in the future,” said Soetjipto, a former national champion of Pencak Silat, an Indonesian martial art.

Indonesian cement makers, including Gresik, Indocement and Holcim, last year sold 43.02 million tons of cement locally and overseas, according to data from the cement association. That’s 91 percent of the 47.2 million tons capacity of the country’s cement makers.