Jakarta. Kino Indonesia, a listed consumer goods company, has ended a business agreement with Wah Kong Corporation, a Malaysian fast-moving consumer goods distributor, and liquidated their joint venture, Kino Pet World, marking the end of the Indonesian company's attempt to venture into the animal feed business.
Kino Indonesia used to own 51 percent in Kino Pet World, while Wah Kong held the remainder. This company was originally formed to establish a pet food factory in Indonesia. However, until now, the factory has not yet been realized.
"The liquidation of this subsidiary has also been approved in a circular decision by the shareholders," Budi Muljono, Kino Indonesia's director, and the corporate secretary, said in a statement.
Budi said Kino Indonesia was working on streamlining its business structure and changing the business model.
In June, Kino Indonesia liquidated other subsidiaries, namely Kino Malee Indonesia and Malee Kino (Thailand) Company in Thailand, a joint venture with a company from Thailand, Malee Capital Company.
Kino Malee Indonesia was formed to establish a beverage factory for the Malee Group in Indonesia. Meanwhile, Malee Kino (Thailand) Company Limited was established to import and distribute Kino's products in Thailand.
Kino Indonesia had to revise down its sales, and net income targets as the Covid-19 pandemic undermine their customers' purchasing power. The company initially set a sales growth target of 15 percent and a net income of up to 30 percent. But the pandemic and the implementation of the Large-Scale Social Restrictions (PSBB) policy that the government imposes to curb the pandemic made the targets irrelevant.
"The downward revision of this target is also in line with the weakening of the consumer confidence index by 83 points since the PSBB. If this index does not improve, the company's sales are expected to be affected, "he explained.
Therefore, Budi continued, the company will focus on cost efficiency in the second half of this year by reducing the purchase of raw materials for products whose sales are less attractive and focusing on increasing sales of products deemed suitable for pandemic conditions.
Kino Indonesia booked Rp 2.19 trillion ($149 million) in sales in the first six-month period this year, down 1.35 percent from the Rp 2.22 trillion it made last year. The company's net income fell 62 percent to Rp 138 billion in the period. Kino Indonesia said the decline in profit was due to the purchase of new machines, increasing productivity in the future.
Kino Indonesia fell 2.3 percent to trade at Rp 2,970 apiece, or about 15.5 times its past 12 month earning, in the first trading session at Indonesia Stock Exchange on Wednesday. On the other hand, the benchmark index rose 0.5 percent to 5,148.