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Indofood faces pressure from agribusiness unit
Consumer goods company PT Indofood Sukses Makmur (INDF) continues to face pressure from its agribusiness unit, which saw a decline in net profit for the first nine months of this year
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onsumer goods company PT Indofood Sukses Makmur (INDF) continues to face pressure from its agribusiness unit, which saw a decline in net profit for the first nine months of this year.
Indofood Sukses Makmur, listed on the Indonesia Stock Exchange with the ticker code INDF, posted Rp 2.82 trillion (US$186 million) in net profit in the third quarter, a 13.6 percent decline year-on-year (yoy).
Meanwhile, the company posted a 3.1 percent increase in consolidated net sales yoy to Rp 54.74 trillion for the January to September period.
Indofood has four business units, namely consumer branded products, Bogasari, agribusiness and distribution. From these four business units, only the agribusiness segment posted a decline in sales.
“Crude palm oil prices remain a challenge to our overall performance,” said Anthoni Salim, Indofood Sukses Makmur president director and CEO in a statement released on Wednesday.
“On a positive note, we managed to record top line growth in the first nine months of this year with notable acknowledgement to the solid performance of the CBP Group,” he said, referring to subsidiary PT Indofood CBP Sukses Makmur (ICBP).
As of the third quarter, sales of the consumer branded product group increased 8.28 percent yoy to Rp 29.02 trillion, while Bogasari rose 9.44 percent yoy to Rp 12.52 trillion.
Meanwhile, the agribusiness group saw a decline in sales by 17.12 percent yoy to Rp 8.81 trillion in the first nine months of this year, whereas the distribution segment increased 3.8 percent to Rp 4.37 trillion in the same period.
Anthoni, who also leads ICBP, claimed that ICBP — which sells the flagship instant noodle brand Indomie, as well as dairy products and beverages — delivered solid performance in the third quarter.
“Amid intensifying competition, we will continue to be persistent with our strategy in pursuing sustainable growth, and strengthen our position in the market,” he said in a statement.
ICBP’s net profit increased 14.6 percent to Rp 3.48 trillion in the first nine months of this year. Based on its published financial report, ICBP posted 7.5 percent growth in consolidated net sales to Rp 29.48 trillion from Rp 27.43 trillion in the same period a year before.
Instant noodles continued to contribute the most to ICBP’s revenue, followed by dairy products, snacks, beverages, food seasoning and nutrition and special foods.
“The company’s [ICBP] strong position in the noodle market is supported by solid sales volume. Improvements in the dairy division should also sustain top line growth going forward,” stated Danareksa Sekuritas analyst Natalia Sutanto in a research report on Wednesday.
Panin Sekuritas analyst William Hartanto was also positive on both INDF and ICBP’s prospects, saying that INDF should focus on the segments that are the major drivers of its growth, namely the consumer branded product segment.
“The depreciation of the rupiah has not really had an impact on ICBP’s performance, as the company has actually delivered a great performance. By the end of this year, there should be a positive catalyst from rising consumer consumption,” he said.
