The plant, Eagle High’s 10th crude palm oil processing facility, will have a processing capacity of 30 tons of palm oil per hour, according to corporate secretary Rudy Suhendra. (Antara Photo/Regina Safri)

Weak Rupiah, Slowing Demands Take a Hit on Salim Ivomas Pratama's Profit


OCTOBER 29, 2015

Jakarta. Profits at Salim Ivomas Pratama, a listed agribusiness unit of consumer goods giant Indofood, suffered a steep decline in the January to September period, battered by a combination of volatile exchange rates and waning consumer demands.

The company's net profit through the nine month period reached approximately Rp 74.4 billion ($54.8 million), declining 87 percent from Rp 568 billion in the same period last year, as sales dropped 7 percent to Rp 10.1 trillion, according to a statement on the Indonesia Stock Exchange (IDX) on Thursday.

The management of Salim Ivomas noted in a separate filing to the local stock exchange that the decline in sales was namely due to lower sales in the edible oils and fats division, whose contribution shrank to 62 percent from 70 percent.

At the same time, the company faced a high toll from the weak rupiah, which has been trading at its lowest level since the Asian financial crisis in 1998, as losses due to foreign exchange rates bloated to some Rp 400 billion from Rp 33 billion in 2014.

"Without forex impacts, profit [at the SIMP Group's] for the period would have been Rp 372 billion or down 54 percent year-on-year," the management of Salim Ivomas said in a statement on Thursday. The company only export around 8.4 percent of its total production abroad, relying heavily on domestic market.

With a 9 percent decline against the US dollar since the beginning of the year, the persistently depreciating rupiah has caused woes among companies across the country, like Salim Ivomas Pratama, as they struggled to manage its dollar-denominated debts.

Another local agriculture company, Astra Agro Lestari, recently reported a 92 percent profit decline through the nine-month period due to a Rp 958 billion hit in foreign exchange losses.

Meanwhile, Salim Ivomas' plantation unit, London Sumatra, booked a 33 percent fall in profit to Rp 469.7 billion during the nine-month period. The subsidiary saw a 13 percent drop in sales to Rp 3 trillion, blaming weak commodity prices for the decline.