May 19, 2014 7:30 pm JST

Indonesia noodle giant Indofood plans $860M capex in 2014

WATARU SUZUKI, Nikkei staff writer

JAKARTA -- Indonesia's Indofood Sukses Makmur, the world's leading producer of instant noodles, plans to boost capital spending by nearly 50% this year, as it looks to expand its agriculture and consumer products businesses.

     The key unit of conglomerate Salim Group said Friday it plans 9.6 trillion rupiah ($860 million) in capital expenditure this year, a 45% increase from last year's 6.59 trillion rupiah. Although Director Werianty Setiawan said actual spending tends to fall short of the company's initial plans, it is nonetheless expected to be one of the biggest investment budgets in the company's history.

    The biggest portion, 32% of the total, will be spent on expanding Indofood's agriculture business, which includes palm oil cultivation and cooking oil production. Another 27% will go toward increasing capacity at the company's main subsidiary, Indofood CBP Sukses Makmur, which runs its consumer food and beverage operations.

     The move comes after a busy year of acquisitions by Indofood, including a 50% stake in Brazilian sugar producer Companhia Mineira de Acucar e Alcool Participacoes, a 34% slice of another sugar maker, Roxas Holdings of the Philippines, and an 82.88% stake in Chinese vegetable processor Minzhong Food Corporation.

     Indofood also bought Pepsi-Cola Indobeverages, the bottler of Pepsi soft drinks in Indonesia, through a joint venture with Japan's Asahi Group Holdings.

     Anthoni Salim, president of Indofood and son of Salim Group's founder Sudono Salim, said the company will continue to expand overseas.

     "We are currently eyeing Asean. It is a huge market with 600 million people and we are preparing for its integration in 2015," he said. Salim added the company has no specific deals in progress at the moment.

     Finance Director Paulus Moleonoto said the company will aim to increase revenue 10-20% this year, in line with last year's increase of 15%. The growth will come from all of its major businesses, he said. Sales at Minzhong, which it launched a takeover bid for last September, will contribute to Indofood's full-year earnings.

    In the January to March quarter, the company's sales rose 27% year on year to 16.3 trillion rupiah.