Lonsum's net income drops 24%

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)