Davomas revises profit projection

JAKARTA (JP): PT Davomas Abadi, the country's largest producer of cocoa butter and cocoa powder, has revised upwards its profit projection for this year from Rp 28 billion (US$11.7 million) to Rp 40 billion, due to its capacity expansion.

"We formerly made a projection based on an annual production capacity of 40,000 tons following the second expansion in July, 1995," Davomas' financial director, Ernas Krisna Mulya, told journalists here over the weekend.

"Early next month, we will commence the operation of our third production line with an installed capacity of 20,000 tons, raising the combined capacity to 60,000 tons per annum," Ernas added.

The company made a profit of Rp 24 billion last year.

Ernas said that for the construction and machinery procurement of the third line at its industrial complex in Tangerang, West Java, the company spent Rp 40 billion, all derived from its internal cash flow.

He said that the company has also revised upwards its projection on the sale revenue from Rp 180 billion to Rp 215 billion.

In 1995, Davomas recorded a 50 percent increase in revenue to Rp 128 billion, on a stronger demand for cocoa products.

"During the first six months of this year, we already booked Rp 95 billion in sale revenue with a total volume of 19,600 tons, while our profit reached Rp 19.5 billion, an increase of 260 percent for the same period last year due to the doubling of production," Ernas said.

He said that in addition to the production increase, Davomas will also take advantage of the stability of cocoa butter and cocoa powder prices on the international market because all its products are exported. Seventy percent of the exports are destined for the United States and 30 percent for European countries.

Ernas said the company is also gradually increasing the production of cocoa butter, which now accounts for more than 50 percent of its total production. "The selling price of cocoa butter is almost five times higher than cocoa powder," he said.

Last year's production of cocoa butter accounted for 13,500 tons, as compared to 13,300 tons of cocoa powder.

Davomas, according to Ernas, has no difficulty in procuring 50,000 tons of cacao as raw material from local farmers.

Indonesia's cacao production, mostly derived from Sulawesi and East Nusa Tenggara, is estimated to reach 350,000 tons this year.

He said that the average selling price of the company's products steadily increased from Rp 4,010 per kilogram in 1993 to Rp 4,550 in 1994, Rp 4,780 in 1995 and Rp 5,000 in the first half this year.

The price of cacao beans is relatively stable at Rp 2,700 per kilogram with a very narrow fluctuation because the commodity is now under close control of the International Cocoa Organization.

Davomas' products are widely used by downstream industries as raw materials for making various kinds of medicine, cosmetics and food products such as biscuits, wafers, candy and chewing gum. (alo)