Indonesian Palm Oil Companies Report Declining Net Profit
Indonesian companies engaged in the production of a variety of agricultural products, such as palm oil, experienced a rather poor year in 2012 regarding net profit. Global economic turmoil has reduced the world's consumption of palm oil in both the developed markets and developing markets. In particular decreased demand from China, the world’s biggest buyer after India, made a negative impact on the balance sheets of Indonesian companies.
PP London Sumatra Indonesia Posts 34.4 Percent Decline
PP London Sumatra Indonesia, a plantation unit of the Salim Group (Indonesia's largest conglomerate), posted a decrease in net profit over 2012 of 34.4 percent to IDR 1.12 trillion (US $116.1 million). Similarly, its earnings per share fell to IDR 164 from a previous IDR 249 per share. This lower performance was mainly brought on by the company's 10.2 percent decline in sales. Furthermore, the company was affected by the downswing in commodity prices. PP London Sumatra Indonesia focuses on the production of palm oil, rubber, tea and cocoa.
Salim Ivomas Pratama Posts 31 Percent Decline
Another agribusiness company (which also forms part of the Salim Group and is parent company of PP London Sumatra Indonesia), Salim Ivomas Pratama, also posted a significant decline in net income due to falling commodity prices and rising operational costs (such as fuel costs). Its net income declined by 31 percent to IDR 1.16 trillion (US $120.2 million). Net sales, however, increased by 10 percent driven by higher crude palm oil and edible oil sales. The start of the company's first sugar cane crushing factory triggered higher sugar sales.
Salim Ivomas operates in Indonesia's agribusiness sector. Its business operations include an integrated chain of palm oil operations (from the breeding and cultivation of oil palms, milling, refining of crude palm oil, to the distribution of palm oil derivatives). The company also cultivates crops such as sugar cane, cocoa, tea and rubber.
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