Unilever Indonesia to Invest $500 Million in Production Expansion
Unilever Indonesia, one of the largest consumer goods producers in Indonesia, will continue to focus on the strengthening of its production lines. The company plans to invest up to USD $500 million over the next five years. Sancoyo Antarikso, External Relations Director & Corporate Secretary at Unilever Indonesia, said the funds will be used to expand production capacity of the company's nine factories across Indonesia.
The USD $500 million that is planned to be invested by Unilever Indonesia over the next five years will primarily be spent on the production capacity expansion programs of the company's two main business segments: (1) home and personal care, and (2) food and refreshment. Antarikso presented the plans to Indonesian Industry Minister Airlangga Hartanto on Monday (05/06).
Last year, in 2016, Unilever Indonesia opened a palm oil processing plant in the special economic zone of Sei Mangkei in North Sumatra, a project that required IDR 2 trillion (approx. USD $150 million) worth of investment. This plant, operated by subsidiary Unilever Oleochemical Indonesia, can process 200,000 tons crude palm kernel oil per year (turning it into fatty acid, glycerine and soap noodle). This plant is a key milestone for the company because it is eager to make sure that all palm oil-related raw materials originate from certified palm oil.
The Sei Mangkei industrial zone in North Sumatra is becoming increasingly important for Unilever Indonesia as it plans to open several new downstream plants in this zone, specifically for the production of shampoo and soaps.
So far this year shares of Unilever Indonesia have risen 20.68 percent to IDR 46,825 a piece. For investors Unilever Indonesia is a key investment choice. The chart below shows the company's share performance shows a solid gain supported by the rapidly rising middle class of Indonesia, who increasingly use the company's products, such as soaps, detergents, margarine, ice cream, savory, soy sauce, cosmetic products, tea based beverages and fruit juice.
Stock Quote Unilever Indonesia - UNVR:
Considering Indonesia's economic growth is estimated to accelerate in 2017 and beyond, which implies strengthening consumer purchasing power, there should be plenty of opportunities for further growth. In fact, shares of Unilever Indonesia still managed to grow during Indonesia's 2011-2015 economic slowdown, reflected the fundamental strengths of the company. Unilever Indonesia is also among the biggest companies in terms of market capitalization on the Indonesia Stock Exchange.
Hemant Bakshi, President Director of Unilever Indonesia, said the huge and young population of Indonesia (numbering about 260 million people), growing welfare, and still relatively low local consumption of the company's products are the key factors that will encourage good growth for the company on the long term.
In the first quarter of 2017 Unilever Indonesia recorded a 8.9 percent year-on-year (y/y) growth of sales to IDR 10.8 trillion (approx. USD $812 million) from the same quarter one year earlier. Its new oleochemical plant in Sei Mangkei contributed USD $80.6 million to Q1 sales by producing 52,000 tons (25 percent of which was exported).