Range International’s Indonesian arm achieved a record 35% gross margin in Q2 2026 despite export headwinds and economic uncertainty. The company expanded its rental pallet fleet and secured new funding to support growth.
- Record 35% gross margin in Indonesian operations
- 27% increase in pallets delivered year-on-year
- Rental pallet contracts rise to 11,444 units
- Net cash outflow of US$279k driven by seasonal costs
- Secured A$454k debt facility to fund rental pallet expansion
Record Margins and Production Growth in Indonesia
Range International Limited (ASX:RAN) has reported a standout quarter for its Re>Pal Indonesia business, posting a record gross margin of 35% for Q2 2026. This margin level is notable given the company’s ongoing pricing concessions on volume orders and reflects improved productivity at its new East Java facility. Pallet deliveries surged 27% compared to the same period last year, reaching 32,873 units, underscoring the operational momentum despite challenging external factors.
The Indonesian operation’s sales revenue was US$451,000, marginally ahead of the prior corresponding period but tempered by uncertainties among export customers linked to the Middle East conflict and associated shipping cost pressures. The company noted typical seasonal softness in the first half of the year, compounded by economic and political instability in Indonesia, including a weakening Rupiah and central bank upheaval.
Rental Pallet Expansion and Funding Initiatives
Range International’s rental pallet book grew to 11,444 units, reflecting its strategic pivot towards rental models that promise more stable recurring revenue streams. The company has received its second rental pallet mould and is commencing test production for SMART, part of the Sinar Mas Group, with expectations of significant rental orders if testing proceeds smoothly.
To support this capital-intensive growth, Range secured a A$454,000 secured debt facility from professional investors, some existing shareholders, at an 18% annual interest rate. This facility is earmarked for manufacturing rental pallets and related expenditures. Meanwhile, ongoing negotiations with a large foreign bank aim to unlock further funding to accelerate the rental fleet expansion, though no agreement has been finalized yet.
Cash Flow and Cost Pressures
The company recorded a net cash outflow of US$279,000 for the quarter, influenced by seasonal Australian and Indonesian expenses including retirement payments and professional fees exceeding US$110,000. Capital expenditure on property, plant, and equipment was US$157,000, reflecting ongoing investment in production capabilities. Despite the cash burn, Range ended the quarter with US$191,000 in cash and an additional US$134,000 in unused financing facilities, providing approximately 1.16 quarters of funding based on current operating cash flow.
Raw material costs remain elevated due to high ethylene and propylene prices, themselves linked to spiking crude oil prices. Range continues to blend various plastics, including recycled materials, to manage costs without compromising product quality. The company’s new factory head has implemented tighter quality control measures, improving pallet strength and appearance, which are critical to maintaining relationships with fast-moving consumer goods clients.
Currency and Economic Challenges in Indonesia
The Indonesian Rupiah weakened a further 6% against the US dollar and Australian dollar during the quarter, benefiting export clients but exacerbating inflation and economic uncertainty locally. The recent unexpected resignation of the Central Bank Governor has added to concerns over fiscal management and monetary policy stability. Range is monitoring these developments closely, which continue to influence customer caution and demand patterns.
Reflecting on its reporting currency, Range is considering shifting from US dollars to Australian dollars to better align with its Australia-listed status and Asia-Pacific operational footprint.
Bottom Line?
Range International’s solid margin gains and rental fleet growth come with cash flow pressures and economic uncertainties that will test the company’s ability to secure further funding and sustain momentum.
Questions in the middle?
- How will ongoing geopolitical tensions and Indonesian economic volatility affect export demand and pricing power?
- What progress will Range make in securing additional funding to scale its rental pallet business?
- Can the company maintain its gross margin amid fluctuating raw material costs and currency pressures?