Indofood's profit drops by 62% on forex losses
Indofood's profit drops by 62% on forex losses
Rendi Witular, The Jakarta Post, Jakarta
The world's largest instant noodle maker PT Indofood Sukses
Makmur announced on Friday its net profit in the first semester
dropped by 62 percent on-year, mostly on foreign exchange losses
and interest burdens.
In a press statement, the publicly listed company said profit
dropped to Rp 116.8 billion (US$12.9 million) in the first six
months ending June, from Rp 308.9 billion in the same period last
year, despite an increase in sales to Rp 8.5 trillion from Rp 8.4
trillion.
Further, the company's gross profit grew by 12 percent to Rp
2.2 trillion from Rp 2 trillion, while operating income increased
by 16 percent to Rp 1 trillion from Rp 867.2 billion.
The company said the sharp decline in net profit was mainly
due to net foreign exchange losses of Rp 277 billion during the
first semester, against net foreign exchange gains of Rp 73
billion a year earlier.
"The approximately 10 percent depreciation of the rupiah and
losses on unwinding hedging contracts worth $60 million during
the first quarter of this year are the principal reasons for the
foreign exchange losses," it said.
The average exchange rate in the first semester was Rp 8,794,
weaker than the Rp 8,678 average in the same period last year,
the company said.
Although the company reduced its outstanding debts to $383
million and Rp 3.7 trillion as of June, from respectively $400
million and Rp 4.1 trillion as of December 2003, interest burdens
remained high.
The company set aside Rp 438 billion for interest expenses in
the first semester, down slightly from Rp 461 billion last year.
Newly appointed Indofood president director Anthoni Salim said
as part of the ongoing debt management program, Indofood would
continue to seek alternative financing sources to lower its
interest rates and to minimize its foreign exchange exposures.
The company, which holds an 88 percent market share for
instant noodles domestically, continued to maintain its hedging
policy by setting up "principal-only swap" contracts of $250
million, he said.
Indofood is 52 percent owned by Hong Kong-based First Pacific
Co. Ltd., which is controlled by the Salim family, while the
remainder is held by the public.
The company also reported its gross margin improved to 26.1
percent from 23.7 percent, upon an increase in the price of
flour, better margins of cooking oils and fats and crude palm
oil.
Noodles, flour and edible oils and fats remained the principal
contributors to the Indofood sales with a total contribution of
Rp 7.4 trillion, or 87 percent of consolidated sales.
Despite tougher competition in the domestic noodle industry,
Indofood's noodle sales increased to 4.83 billion packets, as
against 4.78 billion in the first half of last year.
Instant noodles are one of the country's main staple foods
after rice, and the pillar of Indofood's business.
The company also booked a 12.9 percent increase in flour sales
during the first semester to 1.2 million tons.
Indofood shares were unchanged on Friday at Rp 700 on the
Jakarta Stock Exchange.
Rendi Witular, The Jakarta Post, Jakarta
The world's largest instant noodle maker PT Indofood Sukses
Makmur announced on Friday its net profit in the first semester
dropped by 62 percent on-year, mostly on foreign exchange losses
and interest burdens.
In a press statement, the publicly listed company said profit
dropped to Rp 116.8 billion (US$12.9 million) in the first six
months ending June, from Rp 308.9 billion in the same period last
year, despite an increase in sales to Rp 8.5 trillion from Rp 8.4
trillion.
Further, the company's gross profit grew by 12 percent to Rp
2.2 trillion from Rp 2 trillion, while operating income increased
by 16 percent to Rp 1 trillion from Rp 867.2 billion.
The company said the sharp decline in net profit was mainly
due to net foreign exchange losses of Rp 277 billion during the
first semester, against net foreign exchange gains of Rp 73
billion a year earlier.
"The approximately 10 percent depreciation of the rupiah and
losses on unwinding hedging contracts worth $60 million during
the first quarter of this year are the principal reasons for the
foreign exchange losses," it said.
The average exchange rate in the first semester was Rp 8,794,
weaker than the Rp 8,678 average in the same period last year,
the company said.
Although the company reduced its outstanding debts to $383
million and Rp 3.7 trillion as of June, from respectively $400
million and Rp 4.1 trillion as of December 2003, interest burdens
remained high.
The company set aside Rp 438 billion for interest expenses in
the first semester, down slightly from Rp 461 billion last year.
Newly appointed Indofood president director Anthoni Salim said
as part of the ongoing debt management program, Indofood would
continue to seek alternative financing sources to lower its
interest rates and to minimize its foreign exchange exposures.
The company, which holds an 88 percent market share for
instant noodles domestically, continued to maintain its hedging
policy by setting up "principal-only swap" contracts of $250
million, he said.
Indofood is 52 percent owned by Hong Kong-based First Pacific
Co. Ltd., which is controlled by the Salim family, while the
remainder is held by the public.
The company also reported its gross margin improved to 26.1
percent from 23.7 percent, upon an increase in the price of
flour, better margins of cooking oils and fats and crude palm
oil.
Noodles, flour and edible oils and fats remained the principal
contributors to the Indofood sales with a total contribution of
Rp 7.4 trillion, or 87 percent of consolidated sales.
Despite tougher competition in the domestic noodle industry,
Indofood's noodle sales increased to 4.83 billion packets, as
against 4.78 billion in the first half of last year.
Instant noodles are one of the country's main staple foods
after rice, and the pillar of Indofood's business.
The company also booked a 12.9 percent increase in flour sales
during the first semester to 1.2 million tons.
Indofood shares were unchanged on Friday at Rp 700 on the
Jakarta Stock Exchange.