0 Agriculture Woes Crimp Indofood Net Income Rise

Indonesian food production powerhouse Indofood Sukses Makmur posted modest growth in net income last year as declining profitability in its agricultural business dragged down the profit from its food-related businesses. Net income for the biggest listed food producer in Indonesia hit Rp 3.26 trillion ($335 million) last year, up 6 percent compared to 2011. In a statement, Indofood said its profitability had been dragged down by the falling price of rubber and crude palm oil. 

Anthoni Salim, Indofood president director, said that despite the declining CPO price the company still managed to post satisfactory earnings last year. “We will continue making efforts to lift our business earnings through the innovation of new products and the expansion of our business portfolio,” Anthoni said. Indofood controls Indofood Agri Resources, an agriculture unit that produces derivative products from CPO and is also engaged in rubber plantation, sugar cane and other crops as well as the crushing of copra. 

The company’s packaged food product manufacturing arm, Indofood CBP Sukses Makmur, contributed 43 percent to Indofood’s total consolidated net sales, which stood at Rp 50.1 trillion last year, up 10 percent on a year earlier. Indofood CBP’s net sales rose 11 percent to Rp 21.6 trillion last year, while the company’s net income rose 10 percent to Rp 2.18 trillion. Indofood CBP produces instant noodles, dairy products, snacks, emulsifier, nutritional products and supplement drinks. 

Flour producing unit Bogasari, another Indofood business, contributed 25 percent of the company’s total net sales, while its agriculture unit contributed 24 percent and its distribution business made an 8 percent contribution. Overseas, Indofood has made several acquisitions. It recently announced it raised its stake in China Minzhong Food Corporation from 15 percent to almost 30 percent of the total issued share capital. CMFC is an internationally accredited integrated vegetable processor in China and distributes its products to 26 countries. 

It is publicly listed on Singapore’s main stock exchange. Earlier this month, Boston Consulting Group researchers identified Indofood as a company set to profit from the rise of Indonesia’s middle class. Shares of Indofood fell 1.3 percent to Rp 7,400 in Tuesday trading in Jakarta, while Indofood CBP’s stock price was flat at Rp 9,050.

source : the jakarta globe