Post Reply
Share this
Digg
Del.icio.us
StumbleUpon
Netscape
Yahoo
Technorati
Googlize this
Facebook
Export PDF
Print
E-mail
Indofood Agri Resources (IndoAgri) (IFAR.SI), Indonesia’s top cooking oil seller, expects crude palm oil output to rise by 5-10% next year after flat growth this year as rains hindered plantation.
IndoAgri, a unit of giant noodle maker Indofood Sukses Makmur (INDF.JK), will also acquire more land for sugar in Indonesia, pitting it against the world’s biggest listed palm oil firm, Wilmar (WLIL.SI), which is also expanding its sugar landbank.
“Sugar is certainly an area that we will expand further in Indonesia, and we are in a process of acquiring more land,” Mark Wakeford, IndoAgri’s CEO, told Reuters in an interview.
“Indonesia is importing around 2 million tonnes a year, so there are domestic opportunities to satisfy that demand... Indonesia is currently only producing 60% of its doemstic demand.”
The $2.5 billion ($3.37 billion) company, which has a combined landbank of more than half a million hectares in Indonesia, currently has around 11,500 hectares planted to sugar in South Sumatra and will boost that to 18,500 hectares by the end of next year.
SLOWER PLANTATION
IndoAgri had 193,631 hectares planted to palm oil at the end of 2009 and was looking to increase the size of the planted area by 15,000-20,000 hectares in 2010, slower than its initial target of 20,000-25,000 hectares.
Wakeford attributed the slower planting rate this year to higher than expected rainfall in the first quarter. The company plans to increase palm oil plantation area by 20,000-25,000 hectares in 2011.
"For the first half, volume was down by 4-5%, we are expecting (2010) volume would be flat... We normally expect between 5-10% annual volume growth of CPO," he said adding that was the rate the he expected volume to grow in 2011.
He said the revenue impact of the additional volume will depend on how crude palm oil prices move in 2011. In 2009, the company produced 760,000 tonnes of crude palm oil.
IndoAgri reported a 65.5% drop in its April-June quarter net profit, with lower foreign exchange gains and lower valuations of its biological assets.
In the same quarter, Wilmar posted its first decline in four years, joining other commodity firms whose margins have been squeeze by tight edible oil supply.
Golden Agri-Resources (GAGR.SI), the second-largest plantation firm listed in Singapore, posted a 20% rise in second quarter net profit, largely due to foreign exchange gains compared to a loss a year ago.
All three companies have been hit by a decision by the Indonesian government to ban forest clearing for two years.
While Golden-Agri and Wilmar are looking to develop land in Africa, Wakeford said he did not expect the forest clearing moratorium in Indonesia to significantly affect Indoagri’s expansion plan.
“Forestry land would not be land that we would look to acquire for our landbank and if it does come as part of the landbank we would identify it as such and maintain it as high conservation forest,” he said.
IndoAgri shares have gained 3% so far this year, underperforming Golden-Agri, which has gained nearly 13%.
Wilmar’s shares have been weighed by an investigation by Indonesian tax office into a value-added tax refund and have declined 0.8% so far this year.
