Indofood records net loss for 1997

JAKARTA (JP): Indonesia's largest instant noodle maker PT Indofood Sukses Makmur yesterday reported a net loss in 1997 of Rp 1.2 trillion (US$150 million) as a result of the sharp plunge in the value of the rupiah.

The publicly-listed company said it had decided to take a one- time charge amounting to Rp 1.8 trillion for its net forex losses, using the year-end exchange rate of Rp 5,300 to the U.S. dollar.

"From the total forex losses, Rp 352 billion was charged as 'normal forex losses' and Rp 1.5 trillion was recorded as net extraordinary losses," the company said in a statement.

If Indofood had chosen to use a year end exchange rate of Rp 4,650 the net loss would have been Rp 895 billion, company chief executive officer Eva Riyanti Hutapea said.

The company announced that net sales for the year ending Dec. 31 grew by 17.4 percent to Rp 5 trillion, while income increased by 21.8 percent to Rp 855 billion.

The noodle division remains the major part of the company's operations, accounting for 35 percent of total sales. Last year the division grew by 12 percent and sold 8.2 billion packets. The division's net operating profit made up 39 percent of the group's total operating profits.

"It is noteworthy that profitability of the noodle operations has been sustained despite the fact that Indofood has not increased selling prices since January 1995," the statement read.

The Bogasari Flour Mills division contributed 22 percent of consolidated net sales. Its net operating margin of 16 percent was equivalent to 21 percent of the group's operating profits, Indofood said.

The newly acquired Edible Oil & Fats business performed in line with expectations, generating 32 percent of total sales.

The snack food and baby food divisions also continued to maintain their dominant market share positions, the statement added.

Indofood holds Rp 6.2 trillion in bank loans, most of which are denominated in U.S. dollars and repayable within five years.

The company hedged 43 percent of foreign currency loans at the end of December.

"Currently, excluding export revenues, Indofood has covered more than 80 percent of its exposure at favorable rates," it said.

The company's hedging position will strengthen as forex revenues arising from exports are expected to exceed $300 million in 1998, compared to $257 million last year.

The company said that it will maintain its commitment to paying interest and principal installments from outstanding loans on time. (rei)