Lonsum's net income drops 24%

JAKARTA (JP): Publicly listed PT PP London Sumatra Indonesia (Lonsum) reported a 24 percent drop in net income to Rp 41.64 billion (US$12.24 million) in the year to September.

The company said yesterday the drop was partly due to an extraordinary charge of Rp 44.91 billion following the rupiah's depreciation.

"This was due to the conversion of the U.S. dollar debt and the capitalization of the debt's portion used in the development of new plantations," the company said.

Before the drop, the company achieved an increase in its after-tax profit of 59 percent to Rp 86.54 billion.

The company's interest income also jumped 327 percent to Rp 36.94 billion.

Its operating profit rose 17 percent in the year to September to Rp 83.23 billion over the same period last year.

The company said its management attributed this result to an increase in production of palm oil and management of costs.

The company's president, Geoffrey Brown, said the impact of the rupiah's depreciation would be a one-time loss the company would book this year.

"From here on, we forecast stronger returns as the company will earn more rupiah for its dollars," he said.

He said the company's revenue was denominated in dollars while costs were primarily denominated in rupiah.

For the period under review, Lonsum achieved sales of 78,514 tons of palm oil at an average price of $546 per ton and 12,449 tons of rubber at an average price of $1,382 per ton, an increase of 15 percent and 2 percent respectively.

Its total cost of goods increased by only 9 percent to Rp 62.24 billion.

Brown said that during this year, the company had largely kept to its forecast of increasing palm oil production and reducing rubber production

The policy had contributed significantly to overall performance with the rubber price averaging $1,382 against the current price of $845, he said.

In accordance with its strategy to expand total hectares under cultivation, Lonsum is developing 100,000 hectares in South Sumatra and 15,000 hectares in East Kalimantan, where palm oil production is expected to commence in 1998 and rubber by 2000.

Lonsum, which was established in 1906 in North Sumatra, continues to average more than five tons of crude palm oil per hectare, or at least 10 percent higher than yields achieved by other Southeast Asian plantation companies. (08)