Consumer goods giant PT Indofood Sukses Makmur is looking to spend more money on innovation that it claims will lay the foundation for the group’s expansion.

For 2017, it has allocated Rp 9.1 trillion (US$683.64 million) in capital expenditure (capex), an increase of almost 20 percent from the Rp 7.6 trillion allocated in 2016.

Indofood Sukses Makmur director Thomas Tjhie said most of the capex would be used for expansion rather than acquisition, claiming that the company did not have any acquisition plans this year.

“We will use the capital expenditure mainly for expansion, not acquisition. We will finance some things by cash and some by banking loans, but we have not decided the specific allocation yet,” Thomas said in a press conference on Friday after Indofood’s annual general shareholders meeting.

He added that the expansion would see the firm innovate and roll out new products, partially to cope with a slowdown in consumption, but he fell short of providing details about the expansion.

The consumer brand products division — run by food producer PT Indofood CBP Sukses Makmur — has obtained the largest chunk of this year’s capex figure with Rp 4.6 trillion, followed by the Bogasari division, which produces wheat flour and pasta, with Rp 2 trillion, the agribusiness division with Rp 2 trillion and the distribution division with Rp 500 billion.

With the exception of agribusiness, all divisions saw their capex increase between 18 percent and 67 percent from last year.

Supported by the expansion, Indofood hopes to post 10 to 12 percent growth in sales, while Indofood CBP is expected to reap a 8 to 12 percent rise in sales in 2017.

Such targets would bring Indofood’s sales to sit at between Rp 73.42 trillion and Rp 74.76 trillion, and those of Indofood CBP between Rp 37.22 trillion and Rp 38.6 trillion.

“We also target exports to contribute about 8 percent to 10 percent to total consolidated sales this year,” Thomas said, adding that exports accounted for 9 percent of total sales in 2016.

At present, Indofood is one of the largest consumer products firms in Indonesia, along with giant PT Unilever Indonesia.

Among Indofood’s most popular products in domestic and overseas markets is its instant noodles, which is under Indofood CBP and has become an anchor for the group.

Last year, Indofood CBP posted Rp 34.47 trillion in sales, equal to more than 93 percent of Indofood’s total sales. Of Indofood CBP’s figure, instant noodles made up 64 percent.

Sales of instant noodles remained strong entering 2017, raking in Rp 5.9 trillion in the first three months alone.

However, Thomas insisted that no division would get special attention as the company sought to grow all of the divisions.

“We do not seek big growth from just one or two particular divisions. We will push all divisions to grow,” Thomas said.

Indofood Sukses Makmur president director Anthoni Salim said the business situation was more favorable this year, considering both market factors and the government factor, such as policies.

“The business situation is improving, better than in the previous year. We only hope for two things from the government, legal certainty and policy stability,” Anthoni said.

Meanwhile, during Friday’s meeting, Indofood Sukses Makmur’s shareholders approved the allocation of Rp 2.06 trillion from its 2016 profits as dividends, equal to Rp 235 per share. The company will pay out the dividend on July 6.

When combined with subsidiary Indofood CBP, Indofood will pay a total of Rp 3.86 trillion in dividends.

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