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Jakarta Post

Efficiency, high demand boost Indofood profits

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Tue, March 24, 2015   /  06:08 am
Efficiency, high demand boost Indofood profits

Publicly listed food giant PT Indofood Sukses Makmur (INDF) ended last year with a boost in both revenue and net profits, mainly driven by cost efficiency and sales of instant noodles that remained a national favorite.

INDF net sales rose by 14.4 percent to Rp 63.6 trillion (US$4.9 billion) last year from Rp 55.6 trillion in the previous year, according to the company'€™s financial report published on Friday. The surge in net sales, coupled with a 42.4 percent decline in expenses to Rp 1.55 trillion last year, successfully boosted the firm'€™s net profit by 56 percent to Rp 3.9 trillion last year.

'€œWe are pleased to report that Indofood has performed well in 2014. We are optimistic but cautious as we enter 2015,'€ INDF president director and CEO Anthoni Salim said in a press statement.

The group, which is run by the Salim family, currently operates five business divisions consisting of consumer branded products (CBP), flour-maker Bogasari, agribusiness, distribution, as well as cultivation and processed vegetables.

INDF'€™s subsidiary PT Indofood CBP Sukses Makmur (ICBP), which oversees CBP, comprised 47.7 percent of INDF'€™s total net sales last year, with noodles becoming the largest earner.

'€œWhen it comes to instant noodles, Indonesia came second in terms of demand for instant noodles with a total consumption of 14.9 billion packs in 2013,'€ said KDB Daewoo Securities Indonesia analyst Mimi Halimin, citing data from the World Instant Noodles Association (WINA).

China and Hong Kong, meanwhile, topped the list with total combined consumption of 46.2 billion packs of noodles in the same period.

Indofood'€™s instant noodle division, famous for its Indomie brand, made up 66.6 percent, or Rp 19.6 trillion, of ICBP'€™s total net sales last year of Rp 29.9 trillion.

The Bogasari, agribusiness and distribution divisions generated Rp 19.9 trillion, Rp 14.7 trillion and Rp 5.1 trillion last year, respectively.

Meanwhile, earning from the cultivation and processed vegetables division, which is run by China Minzhong Food Corporation Ltd., was not included in INDF'€™s financial report.

INDF has previously stated that it would divest its stake of 52.94 percent in the China Minzhong Food Corporation to China Minzhong Holding Ltd.

Brokerage and securities firm Danareksa forecasts that INDF will record better growth this year as better macroeconomic conditions will translate into higher consumer purchasing power.

Danareksa analyst Jennifer Yapply said that her firm estimated the strongest volume growth would be experienced by the beverage division with around 30 percent growth.

Prospects for the consumer sector in the country would remain bright as household consumption will continue to be the main growth engine for the country'€™s economy, accounting for more than half of Indonesia'€™s gross domestic product (GDP), analysts said.

INDF'€™s shares slumped by 0.34 percent to Rp 7,400 per piece at Monday'€™s close. The stocks have advanced almost 10 percent so far this year, outperforming the broader benchmark Jakarta Composite Index'€™s (JCI) 4 percent gain.

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