Indofood aims for Rp 350b profit

JAKARTA (JP): PT Indofood Sukses Makmur, the country's largest instant noodle producer, expects to book Rp 350 billion (US$148.74 million) in net profit this year despite higher flour prices.

The profit projection represents a 14 percent increase from last year's figure of Rp 305 billion.

A company director, Eva Ryanti Hutapea, said yesterday that the company has also projected a significant increase in net sales to approximately Rp 3 trillion this year against last year's Rp 2.09 trillion, partly due to a full year's contribution from its subsidiary PT Bogasari Flour Mill.

Eva said that of the projected net sales, Rp 1.8 trillion will come from Bogasari, which was acquired by Indofood in July 1995.

She added that the sale projection had been made before the government raised the flour price early last month.

"We didn't revise our projection even though the government increased flour prices," Eva said. "But that's not to say that the flour price increase hasn't affected our production costs."

On July 10, the State Logistics Agency (Bulog) raised flour prices to Rp 704.44 per kilo, including value added tax, from Rp 681.91, due to increasing wheat prices on the world market.

Eva said that because of the flour price increase, Indofood will allocate additional costs of Rp 4 billion for the July- December period of this year.

"We will reduce the funds budgeted for promotion to offset the additional operation costs," Eva said.

She also said that Indofood cannot take advantage of the flour price increase even though Bogasari is the owner of the flour mill which processes Bulog's wheat into flour.

Bulog's chairman, Beddu Amang, noted when announcing the new flour price that Bulog will not change its wheat prices or wheat processing fees.

Commenting on Indofood's performance, Eva said: "We are optimistic about reaching our profit target of Rp 350 billion."

She declined to mention the exact profit figure for the second quarter of this year, but said the company's profit was higher than the Rp 76 billion achieved in the first quarter.

She did confirm that total profit in the first half of this year was less than 60 percent of the expected Rp 350 billion for the whole year. (alo)