Noodles remain top contributor to Indofood

JAKARTA. PT Indofood CBP Sukses Makmur (ICBP), famous for its ubiquitous instant noodles, maintains its position as the force behind parent company PT Indofood Sukses Makmur’s (INDF) Rp 45.33 trillion (US$4.95 billion) in net sales last year.

Indofood CBP, which manufactures other consumer branded goods, including dairy products and snacks, contributed 42 percent to the group’s overall sales, or Rp 19.37 trillion, a 7.8 percent increase from the previous financial year according to the firm’s published financial statement.

The rise in instant noodle sales lifted Indofood group’s comprehensive income by 24.91 percent to Rp 5.02 trillion in 2011, 41.1 percent of which was attributed to Indofood CBP’s Rp 2.06 trillion comprehensive income — a 12.3 percent increase from 2010.

“We are pleased with the results achieved in 2011 despite challenging market conditions. Our ability to respond swiftly to changing market dynamics has enabled us to sustain our performance,” Anthoni Salim, Indofood group’s president director and chief executive officer, said in a press statement distributed on Tuesday.

Indofood group, which also ships its instant noodles overseas, has seen rising competition in the food and beverage market as rivals have expanded in efforts to claim a market share in the sector.

But its Indomie instant noodle product remains among the most consumed foods for lower- to middle-class households in Indonesia, an economy that relies heavily on domestic consumption.

Apart from Indofood CBP, the group’s other business units — Bogasari, Agribusiness and Distribution, contributed 26 percent, 24 percent and 8 percent, respectively, to consolidated net sales.

Indofood’s Bogasari business unit, which primarily produces wheat flour and pasta, enjoyed a 16 percent rise in total sales “on the back of stronger volume and higher flour price in conjunction with higher global wheat prices”, the company said in the press statement.

Meanwhile, the group’s Agribusiness division booked 32.7 percent sales growth due to “higher sales volume and average selling price of plantation crops and edible oils and fats products”, the statement reads.

Indofood’s agribusiness unit — which produces cooking oil and margarine and cultivates rubber, sugar cane, cocoa and tea — is run by publicly listed PT Salim Ivomas Pratama (SIMP) and PT Perusahaan Perkebunan London Sumatra Indonesia (LSIP), which are subsidiaries of Singapore-listed Indofood Agri Resources Ltd.

But faster growth of the whole Indofood group’s costs of goods sold, at 26.3 percent or Rp 32.75 trillion, minimized Indofood sales growth, the financial statement shows. As a result, the group’s gross profit rose less than 1 percent to Rp 12.58 trillion.

The company attributed “higher input costs” to the lower gross margin, which decreased to 27.8 percent last year from 32.5 percent in 2010. Operating margins also fell to 15.1 percent from 16.4 percent as a consequence.

Despite pressures on margins, Indofood’s operating income grew 8.8 percent last year to Rp 6.85 trillion thanks to lower operating expenses.

“The continuing growth in the domestic economy and the potential it offers has manifested in a bittersweet situation. On one side, it has presented us with huge potential, but on the other side, it brings new challenges,” Anthoni added.

Shares of Indofood, which had a market value of nearly Rp 42 trillion, traded at Rp 4,875 on Tuesday following the earnings announcement, down 0.51 percent from the prior day. Shares have risen almost 6 percent so far this year, in line with the broader stock index’s 5.23 percent gain. (Mariel Grazella/The Jakarta Post)