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Indofood reports 25 percent drop in net profits in first semester
Publicly listed consumer goods giant PT Indofood Sukses Makmur (INDF) reported a more than 25 percent drop in net profits in the first half of the year amid a decline in sales growth and rise in operating costs during the January-June period
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ublicly listed consumer goods giant PT Indofood Sukses Makmur (INDF) reported a more than 25 percent drop in net profits in the first half of the year amid a decline in sales growth and rise in operating costs during the January-June period.
Indofood posted only a 3.7 percent increase in net sales to Rp 32.63 trillion (US$2.4 billion) in the first six months of this year from Rp 31.48 trillion over the same period last year, according to its financial report published on Friday.
The company's net profit dropped by 25.4 percent year-on-year (yoy) to Rp 1.73 trillion in the first half of this year from Rp 2.32 trillion last year, with most of the company's units, except consumer-branded products (CBP), seeing slowing sales growth.
Indofood president director Anthoni Salim said that the firm's resilient business model had provided a solid foundation to maintain sales growth amid less favorable macro-economic conditions.
'We'll persevere in executing our strategies to achieve sustainable growth and overcome the challenges ahead,' he said.
The company's CBP, Bogasari, agribusiness and distribution group accounted for 50 percent, 24 percent, 18 percent and 8 percent of total net sales, respectively.
In addition to lower sales growth, Indofood's earnings were also hit by its rising foreign exchange (forex) losses caused by the rupiah's depreciation against the US dollar, the firm said in a statement.
Indofood's selling and distribution expenses rose by 21.3 percent to Rp 3.59 trillion in the first half of this year from Rp 2.96 trillion last year.
Indonesia's economic growth hit a six-year low of 4.7 percent in the first quarter of this year, with the country's consumer confidence index dropping by 3 points to 120 in the second quarter of the year from 123 in the first quarter, according to Nielsen Consumer Confidence.
The unfavorable economic conditions have affected the firm's businesses divisions consisting of CBP, flour-maker Bogasari, agribusiness, distribution and cultivation and processed vegetables.
The firm's subsidiary PT London Sumatra Indonesia booked a 12.3 percent yoy decline in sales to
Rp 2.08 trillion in the January-June period this year from Rp 2.37 trillion last year.
Drops in the prices of crude palm oil (CPO) and rubber prices have resulted in a 35.5 percent yoy slump in net profits to Rp 308.8 billion in the first half of this year.
Indofood's PT Salim Ivomas Pratama, which runs integrated agribusiness, also saw its sales plunge by 5 percent yoy to Rp 6.79 trillion in the first semester of this year.
Its net profits, meanwhile, slumped 75 percent yoy to Rp 127 billion in the first half.
Indofood's cultivation and processed vegetables business unit, China Minzhong Food Corporation, also saw a 32 percent decline in sales in the first half of the year, mainly on lower demand for processed vegetables in the US and Europe.
Indofood's CBP unit, meanwhile, became the only business unit that showed a good performance in the first half, pocketing growth both in net sales and net profit.
Indofood CBP's consolidated net sales rose by 6.6 percent yoy to Rp 16.55 trillion in the January-June period.
It furthermore booked a 27.9 percent increase in net profit to Rp 1.74 trillion from Rp 1.36 trillion last year.
CBP runs various businesses, with divisions covering noodles, dairy products, snack foods, food seasonings, nutrition and special foods and beverages.
