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ublicly listed plantation firms PT Salim Ivomas Pratama (SIMP) and PT PP London Sumatra Indonesia (LSIP), part of the Salim Group, will set aside a total of Rp 410 billion (US$42.15 million) to buy back their shares from the stock market, they reported on Tuesday.

Salim Ivomas is planning to spend Rp 350 billion to buy back a maximum of 315 million shares, which represent 2 percent of its enlarged shares, to be saved as treasury stock. Funds for the buyback will be
generated from its profits balance.

The company'€™s pro forma financial statements show that after the buyback, Singapore-listed Indofood Agri Resources Ltd. and Indonesia-listed PT Indofood Sukses Makmur (INDF) will continue to have 72 percent and 6.4 percent stakes in the company, respectively.

Other shareholders, including the public, will see their ownership reduced to 19.6 percent from the previous 21.6 percent. Earnings per share will increase to Rp 74.64 from Rp 73.15.

Meanwhile, London Sumatra, a subsidiary of Salim Ivomas, will disburse Rp 60 billion from its profits balance for the shares buyback. It expects to acquire a maximum of 31 million shares, or 0.5 percent of its enlarged shares, to be saved as treasury stock as well.

According to London Sumatra'€™s pro forma financial statements, following the buyback, Salim Ivomas will remain the majority shareholder with 59.5 percent, while public ownership will be reduced to 40 percent from the previous 40.5 percent. Its earnings per share will rise to Rp 164.25 from Rp 163.5.

Both companies'€™ buybacks will be carried out within a maximum period of 18 months after they have acquired their shareholders'€™ approval in extraordinary general shareholders'€™ meetings. Salim Ivomas and London Sumatra will hold the meetings on May 24.

According to Werianty Setiawan, spokesperson of Indofood, the buyback is part of the Group'€™s effort to build market confidence for the two firms due to low CPO price.

In 2012, the companies continued to suffer from declining net profits as a result of low crude palm oil (CPO) prices and high costs. Salim Ivomas reported that its sales surged 10 percent to Rp 13.84 trillion, but net profits dropped 31 percent to Rp 1.16 trillion. CPO sales volume was flat at 829,000 metric tons, while that of palm kernels grew slightly by 5 percent to 202,000 metric tons.

As of December 2012, Salim Ivomas'€™s total assets stood at Rp 26.57 trillion. Its liabilities and equities amounted to Rp 10.48 trillion and Rp 16.09 trillion, respectively.

Meanwhile, London Sumatra booked Rp 4.21 trillion in sales last year, down 10.1 percent from 2011, and its net profits fell 34.4 percent to Rp 1.12 trillion. Its CPO sales volume declined 5.3 percent to 409,823 tons and its palm kernel sales volume was down 1.8 percent to 103,423 tons.

By the end of last year, London Sumatra reported that its total sales reached Rp 7.55 trillion. Its liabilities amounted to Rp 1.27 trillion and its equities stood at Rp 6.28 trillion.

On Tuesday, Salim Ivomas'€™s shares rose by 1.1 percent to Rp 910 apiece and London Sumatra'€™s shares fell 3.4 percent to Rp 1,700 apiece from the previous day.