Indofood to lay off more workers

The Jakarta Post, Jakarta

Aiming to boost efficiency, the world's largest instant noodle maker, PT Indofood Sukses Makmur, has dismissed thousands of workers and plans to keep on doing so until at least 3,500 workers have been laid off by the end of the year.

"As of September, we had laid off 2,900 workers who were mostly nearing retirement age. It is mainly for efficiency reasons," Indofood vice president director Franciscus Welirang said during a company briefing on Wednesday.

The company had around 50,000 workers at the beginning of 2005 and planned to downsize this figure to between 46,000 and 46,500 by the end of the year.

The company has allocated Rp 130 billion (some US$13 million) in severance pay and is hoping that this will save the company between Rp 80 billion and Rp 100 billion per annum in the years to come.

It said that it would automate the packaging process, and also operate three shifts a day to optimize the utilization of the company's production capacity.

Despite the massive layoffs, Franciscus said that the company was also recruiting new employees for its oil palm plantations and newly acquired shipping firm.

Earlier this year, Indofood bought convertible bonds issued by shipping firm PT Pelayaran Tahta Bahtera.

An Indofood director, Cesar M. dela Cruz, said the company would expand its current 97,000 hectares of oil palm plantations to up to 300,000 hectares over the next 10 years.

"But, it is also possible that we might do it within a year," he added, without elaborating.

Its current plantations supply 315,000 tons of crude palm oil (CPO) per annum, or around 50 percent of the company's demand for vegetable oil.

In the first nine months of the year, Indofood's net profit dropped to Rp 42.2 billion from Rp 288.6 billion as of September last year.

"This was due to one-time charges and loans amounting to Rp 217.3 billion," Franciscus said, adding that losses arising from the sale of foreign exchange hedging contracts also contributed to the drop.

Indofood has targeted an increase in its market share for consumer products -- mainly instant noodles -- to up to 75 percent by the end of this year from slightly over 70 percent currently.

"Market share is expected to reach 78 percent next year," dela Cruz added.