Indofood posts 46% drop in profit

The Jakarta Post, Jakarta

PT Indofood Sukses Makmur, the country's largest instant noodle maker, suffered a 46 percent decline in net profit during the first semester, compared to the same period last year, despite a surge in net sales.

The publicly listed company's net sales grew by 6.5 percent to Rp 8.4 trillion (US$1.01 billion) during the period from Rp 7.9 trillion, but failed to push the net profit up, which stood only at Rp 308.9 billion, much less than the profit of Rp 571.1 billion booked in the earlier year period, a press statement said on Thursday.

Indofood attributed the profit decline to lower foreign exchange gains -- down from Rp 314.7 billion during the same period last year to Rp 71.2 billion -- due mostly to the rapid appreciation of the rupiah against the U.S. dollar.

The statement said that the average exchange rate during the six-month period ended on June 30 this year was Rp 8,678 per dollar, compared to 8,940 at the end of last year, and the previous year's first semester average of 9,499.

The company also attributed the profit drop to an increase in interest expenses, which rose to Rp 486.24 billion from Rp 330.15 billion during the same period last year as a result of total large debt positions.

As of March 31, Indofood's debt stood at $412 million and Rp 4.3 trillion.

The company's export revenue totaled $180 million, which represented around 19 percent of its consolidated net sales, a growth of 58 percent over the same period in 2002 at $114 million.

Despite the drop, Indofood CEO Eva Riyanti Hutapea remained upbeat on the company's business prospects.

"Going forward, besides intensifying efforts to strengthen its position in the traditional market, the company will continue to 'segmentize' the market, and to create and develop higher-end margin products in responding to customers' needs in that segment," she said in a statement.

The price of Indofood shares, however, remained unchanged at Rp 750 amid overall weak market sentiment.