Indofood Sukses Makmur plans to boost capital expenditure by 19.7 percent this year to expand its business, the consumer goods giant said.
Expecting the country’s economy to grow stronger, which would result in stronger consumer demand, Indofood Sukses, plans to ramp up capital expenditure to Rp 9.1 trillion ($683 million) this year from Rp 7.6 trillion last year.
“Our economic growth is excellent this year. Standard & Poor’s has just raised our [long-term sovereign bond] rating,” Indofood Sukses Makmur president director Anthoni Salim told reporters on the sidelines of the company’s annual general shareholder meeting on Friday (02/06).
Anthoni, one of Indonesia’s wealthiest people according to GlobeAsia’s rich list, was referring to optimism following S&P’s decision on May 19 to grant long-awaited investment grade status to Indonesia’s sovereign bonds.
Investors also see the upgrade as a sign of the country’s strong economic fundamentals.
Indofood Sukses is involved in four key businesses as a producer of packaged food products, agribusiness, flour making and trading.
Indofood Sukses Makmur director Thomas Tjhie said the company will fund its capital expenditure from internal cash and loans. He said the company plans to allocate Rp 4.6 trillion of this year’s capital expenditure to Indofood CBP Sukses Makmur, its subsidiary that produces various branded consumer products, such as instant noodles, snacks and dairy products.
Around Rp 2 trillion will be allocated to the company’s agribusiness division; Rp 2 trillion for its flour producer arm Bogasari Flour Mills; and the remainder will go to its trading unit.
“We have anticipated increased demand for selective products [especially flour] during Ramadhan and the joint mandatory leave period afterwards, and we already built up some stocks between March and April this year,” Bogasari Flour Mills president director Franky Welirang said.
Indofood Sukses has set a net sales target of Rp 73.42 trillion this year, 11 percent higher than last year, on the back of consumers’ rising purchasing power during the fasting month and the long holiday.
The company’s net income rose 11 percent to Rp 1.2 trillion in the first three months of this year, thanks to strong sales.