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Indofood sees profit recovery in 2016

JAKARTA -- Indofood Sukses Makmur, Indonesia's largest food company by revenue, is predicting a better year ahead, after it saw net profit for fiscal 2015 slide 25% to 2.96 trillion rupiah ($236 million) due to a weak local currency and fluctuations in the commodity market.

     "Entering 2016, we are positive on the improvement in the macroeconomic climate," Anthoni Salim, Indofood's president and chief executive, said in a press release. Since the end of last year, the rupiah has been strengthening against the dollar and commodity prices have been recovering.

    Indofood is known locally for its popular instant noodles but its business also spans commodities, flour and logistics.

    The group's total revenue in 2015 increased 1% to 64.06 trillion rupiah, compared to a 14% growth in 2014. The decline in profit -- its first since 2013 -- was triggered by its Singapore-listed agribusiness unit Indofood Agri Resources, which was hit hard due to a slide in palm oil prices. Flour producer Bogasari also struggled from lower wheat prices as well as intensifying competition.

     A weak rupiah compounded the company's difficulties, as foreign exchange losses on Indofood's dollar-denominated debt ballooned. Financial expenses jumped by more than 70% on the previous year to 2.66 trillion rupiah.

    Meanwhile, Indofood's core food unit -- publicly-listed Indofood CBP -- saw steady increases in revenue and net profit as it raised the price of its flagship instant noodles. CBP's net profit stood at 3 trillion rupiah, more than that of the parent company.

    Analysts expect Indofood's net profit to recover to 3.9 trillion rupiah in 2016, according to QUICK-FactSet, the market data tool.

    Salim said he would "remain cautious," due to the potential emergence of new challenges. "We will continue to pursue sustainable growth, both organically and inorganically, while maintaining a healthy financial position," he said. 

    Indofood, through a subsidiary, recently acquired shares in a tea plantation company for 55 billion rupiah.

    Indofood's shares closed down 1.4% on Monday, in line with the broader Jakarta Composite Index, which declined by 1.1%.

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