Indofood profit falls 37% on weaker rupiah

Indofood profit falls 37% on weaker rupiah

Bloomberg, Jakarta

PT Indofood Sukses Makmur, the world's biggest maker of instant noodles, said profit fell 37 percent in the first nine months this year, as a drop in the rupiah made it more expensive to pay foreign-currency debt and import wheat.

Unaudited net income fell to Rp 284.6 billion (US$31 million), or 33 rupiah a share, in the nine months ended Sept. 30, from Rp 453.5 billion, or Rp 53 a share, in the same period last year, the company said in a statement. Sales rose 0.9 percent to 13.1 trillion rupiah in the period.

The weaker rupiah against the dollar increased the local currency needed to pay more than $380 million of foreign-currency debt. The rupiah fell 8 percent in the nine month-period, compared with a 6.6 percent rise in the same period last year. About 60 percent of Indofood's costs are linked to the dollar, making it sensitive to the currency fluctuations. Indofood had a foreign-exchange loss of Rp 264.8 billion in the period, from a gain of Rp 34.4 billion a year earlier.

Indofood is competing with a growing number of producers, including detergent-maker Wings Group, which began selling instant noodles to compete with Indofood last year. Wing's Mie Sedap noodle brand retails for a fifth less than Indofood's Indomie and Sarimie brands.

Indofood, which accounts for more than 80 of every 100 packs of noodles sold in the country, is counting on increasing consumer demand this year to stem slowing sales growth.

Indonesia's economy, Southeast Asia's biggest, probably expanded as much as 4.9 percent in the third quarter, the central bank said earlier this month. Consumer spending accounts for about 70 percent of the $208 billion economy.