Indofood profit plummets by 25 percent
Indofood profit plummets by 25 percent
The Jakarta Post, Jakarta
The world's largest instant noodle maker PT Indofood Sukses
Makmur announced over the weekend that its audited net profit
last year declined by 25 percent, mostly because of an increase
in interest expense, financing charges and foreign exchange
losses.
In a press statement, the company said that its profit dropped
to Rp 603 billion (about US$71.7 million) in 2003 from Rp 803
billion in 2002, although its sales were up by 9 percent to Rp
17.9 trillion from Rp 16.5 trillion.
The company's operating income jumped to Rp 2 trillion from Rp
1.88 trillion.
Publicly listed Indofood said the decline in profit was mainly
attributable to a 22 percent increase in interest expenses and
other financing charges, which reached Rp 996 billion from Rp 817
billion in 2002.
The increase in the company's interest expense was due to the
replacement of maturing U.S. dollar-denominated debt with a $280
million Eurobond. The debt was obtained before the country's
financial crisis in 1997 with a lower interest rate, while the
bond carried a higher interest of 10.375 percent.
As of last year, the company's dollar-denominated debts
reduced to $400 million from $458 in 2002, with 77 percent of the
debt set to mature in 2007. The company also has around Rp 4.1
trillion of rupiah-denominated debt.
Additional working capital loans obtained in late September
2002, which had a full year effect in 2003, had also contributed
to the decline in profit, Indofood said.
Other factors that shrunk the company's profit was a foreign
exchange loss of Rp 102 billion, from a gain of Rp 216 billion in
2002. The rupiah appreciated by 5.6 percent to Rp 8,465 against
the U.S. dollar as of Dec. 31, 2003 from Rp 8,940 in 2002.
The average exchange rate in 2003 was Rp 8,574 from an average
of Rp 9,264 in 2002, the company said.
Despite tougher competition in the domestic noodle industry,
the company's noodle sales increased by 4 percent to Rp 6
trillion last year on higher prices. The company sold 9.8 billion
packs of noodles, the same volume as 2002.
Noodles are one of the country's main staple foods after rice,
and the main pillar of Indofood's business.
The company also booked a 3 percent increase in flour sales to
Rp 6.1 trillion, although its sales volume declined to 2.2
million tons due to lower industry growth.
But the company's sales of oil and fats declined by Rp 5.4
trillion from Rp 5.7 trillion.
Indofood plans to propose a 30 percent dividend payment from
its net profit -- the same as 2002 -- at its upcoming annual
shareholder's meeting in May.
The company, which holds an 88 percent market share in the
country, previously said that the board of commissioners would
recommend the replacement of the company's chief executive
officer Eva Riyanti Hutapea to shareholders prior to the annual
meeting.
Eva had tendered her resignation from the company late last
year, amid reports of growing disagreement with the Salim family,
the founder and controlling shareholder of the company.
The company is 52 percent owned by Hong Kong-based First
Pacific Co. Ltd., while the remaining shares are held by the
public. First Pacific is controlled by the Salim family.