Nippon Indosari Corpindo Continues to Expand Beyond Borders
Nippon Indosari Corpindo, Indonesia's largest bread products manufacturer and the only one that is listed on the Indonesia Stock Exchange, continues to expand beyond borders. The company announced that it reached an agreement with Caffe Bene, a South Korea-based coffeehouse chain. Caffe Bene is South Korea's biggest coffeehouse chain and also owns hundreds of stores around the globe.
The agreement between Nippon Indosari Corpindo and Caffe Bene means the Indonesian bread and cake producer becomes the exclusive supplier of pastry and cake products to all of the Caffe Bene's outlets that are located in South Korea, effective per December 2017.
Wendy Yap, President Director and Chief Executive of Nippon Indosari Corpindo, is thrilled to see this agreement and believes that it is a new milestone for the company in its quest to become the leading bread producer in Asia by the year 2025.
Previously, the Indonesian bread-maker, which is especially known for its popular Sari Roti brand, had already been eager to expand abroad. In 2016 it created a joint venture with Monde Nissin, a Philippine-based company that manufactures noodles, biscuits, packaged baked goods, and culinary aids, to run a factory in Manila. The Indonesian side holds a 55 percent stake in this joint venture. Meanwhile, a new factory in the Philippines is scheduled to become operational in early 2018. This factory will focus on producing premium bread and cakes for the Philippine market.
Shares of Nippon Indosari Corpindo had risen 0.79 percent to IDR 1,280 by 11:15 am local Jakarta time on Friday (20/10). However, so far this year the company's shares have fallen around 20 percent, with a massive drop occurring between mid-May and early July 2017.
This decline was attributed to bleak corporate earnings. In the first half of 2017 Nippon Indosari Corpindo's sales declined 1 percent year-on-year (y/y) to IDR 1.2 billion, while its net profit tumbled 64 percent (y/y) to IDR 46 billion. The drop in net profit is caused by the decline in sales, while there was also an increase in operational expenses because of higher employee salaries. In addition, there was a burden from the increase in the number of new products that are launched in 2017 coupled with the expansion in its distribution networks.
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