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Indofood bucks COVID-19 trend with profit growth in 2020
Indofood saw its net profit grew more than 30 percent last year as consumers stocked up on packaged foods during the government's "work at home, study at home" policy.
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F
ood manufacturing giant PT Indofood Sukses Makmur (INDF) and its subsidiary, food processing company PT Indofood CBP Sukses Makmur (ICBP), booked profit growth in 2020 on sales driven by strong demand for processed foods, in defiance of the pandemic-induced economic crunch.
According to its latest financial report, publicly listed Indofood saw its net profit grow 31.5 percent year-on-year (yoy) to Rp 6.46 trillion in 2020 while its revenue grew 6.7 percent yoy to Rp 81.73 trillion to offset the 2 percent yoy cost increase to Rp 54.98 trillion.
“Indofood managed to book consistent performance through the strength of its vertically integrated business model and its well-known consumer brands,” Indofood president director Anthoni Salim said in a statement on March 23.
He said that going forward, the company would continue to exercise caution in protecting employee health and to strengthen its vertically integrated business model.
Read also: Indofood, ICBP book double-digit growth in first half of 2020
The Indofood financial report also shows that revenue grew across all four business segments. Subsidiary ICBP, which manages Indofood’s consumer branded products (CBP) segment, the largest contributor to income, grew sharply at 10 percent yoy to Rp 46.97 trillion.
The CBP segment covers products such as Indomilk, Chitato potato chips and Indofood’s all-time bestseller, Indomie instant noodles. Demand for these products remained robust last year as many stay-at-home Indonesians stocked packaged foods during the government’s large-scale social restrictions (PSBB).
ICBP’s net profit grew 30.7 percent yoy to Rp 6.59 trillion in 2020 while revenue grew 10.3 percent yoy to offset the 5.5 percent yoy increase in production costs.
Indofood’s three other business segments, wheat flour and pasta manufacturer Bogasari, agribusiness group IndoAgri and distribution arm, grew respectively 1 percent, 7 percent and 10 percent on an annual basis, buoyed by demand for ICBP products.
“We believe that [Indofood’s] FY20 net profit has outperformed expectations,” analyst Mimi Halimin of Mirae Asset Sekuritas Indonesia wrote in a research note dated March 23.
“We expect that economic activities will gradually recover, translating into better purchasing power. Meanwhile, a wider target market from the CBP business as a result of the Pinehill acquisition and higher CPO prices should also bring positive sentiments to INDF’s 2021 performance outlook,” Mimi said in the note.
Read also: Investors wary of Indofood CBPS acquisition of noodle maker Pinehill
In August 2020, ICBP acquired 100 percent of instant noodle manufacturer Pinehill Co. (Pinehill Group), which produces and distributes instant noodles in the Middle East, Africa and Serbia under the “Indomie” brand licensed by ICBP’s parent company, Indofood.
Indofood shares on the Indonesia Stock Exchange (IDX) was up 0.74 percent on Monday compared to the benchmark Jakarta Composite Index (JCI) that went down 0.46 percent.
