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Indofood to spin off noodle unit
The world’s largest instant noodle producer, PT Indofood Sukses Makmur, will divest its noodle and food seasoning divisions into a separate company, pending approval from the authorities
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he world’s largest instant noodle producer, PT Indofood Sukses Makmur, will divest its noodle and food seasoning divisions into a separate company, pending approval from the authorities.
First Pacific Co., which controls 51 percent of Indofood, said in a statement to the Hong Kong stock exchange on Thursday that the assets of the two divisions, including employees and machinery, would be transferred to a new unit that will be 100 percent owned by Indofood.
Indofood director Franciscus Welirang told The Jakarta Post over the phone Thursday that the transfer of assets was aimed at creating a more efficient performance for the company.
“We want it (Indofood) to be more efficient and effective (after the spin off),” Franciscus said.
He added that the company was in the process of requesting permission from the authorities for the establishment of the new company, which will take over the two divisions currently under the management of Indofood’s Consumer Branded Products (CBP) unit.
CBP, which produces noodles, food seasonings, snack food and nutritious & special foods, is Indofood’s most profitable division, contributing 43 percent to the company’s total net sales of Rp 18.22 trillion (US$1.8 billion) in the first half of this year.
Indofood is expecting the whole process can be completed by Sept. 30, according to a document from the company obtained by The Post.
The shares of Indofood rose 6.7 percent on Thursday to close at Rp 2,775 on speculation that it may offer the new company’s shares to the public through an initial public offering (IPO).
“The split means there’s a potential for an IPO in the future,” said Christine Salim, head of equity research at PT Samuel Sekuritas Indonesia in Jakarta as quoted by Bloomberg.
However, Franciscus refuted the speculation, saying that the company would focus now on completing the spin off process first before deciding upon any other moves.
“We still have a long way to go to complete the process; we must deal with authorities for approvals, not to mention tax problems. So we cannot speculate on the possibility of an IPO now.
“The spin off is part of the company’s effort to make the management of the new company clear and open,” Franciscus said.
Indofood’s net profit was slightly down by 1.4 percent to Rp 799.7 billion in the first half of this year compared to the same period last year on the back of lower prices.
The company said that the contribution from its agribusiness units, which include PT Salim Ivomas Pratama and PT PP London Sumatra Indonesia Tbk, declined to 19 percent in the first half of this year from 28 percent a year earlier due to lower crude palm oil and rubber prices.
Its flour production unit, Bogasari Group, contributed 30 percent to consolidated net sales, unchanged from the same period last year.
