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Listed Indonesian bread maker lower sales growth target

Publication Date : 20-04-2014

 

Publicly listed bread maker Nippon Indosari Corpindo has set a lower sales growth target this year amid a decline in the country’s economic activities, which had suppressed the company’s bottom line last year.

According to the company’s recently published annual report, Nippon — best known for its Sari Roti brand — set a sales growth target of between 20 per cent and 25 per cent this year, lower than the 26 per cent growth it recorded in 2013.

Nippon booked 1.5 trillion rupiah  (US$131.30 million) in sales last year, a 26 per cent increase compared to 1.19 trillion rupiah in the previous year. Its sales growth in 2013 was lower than the company’s original target of 30 per cent.

Net profits rose only by 6 per cent year-on-year (y-o-y) to 158 billion rupiah in 2013 due to lower than expected sales growth combined with rising costs and rupiah depreciation against the US dollar, which pushed up the company’s expenses to buy its imported raw materials.

In 2013, the company’s cost of goods sold amounted to 807 billion rupiah, an increase of 27 per cent from 634 billion rupiah in 2012. Its selling expenses rose by around 24 per cent y-o-y to 377 billion rupiah.

Nippon spokesman Stephen Orlando said that with the operation of the company’s new factories expected to start by the end of this month, the company was on track to secure this year’s target.

“Demand for bread is still very high. This year, we will also introduce several new products,” he said.

The new factories will be built in Purwakarta, West Java, and Serang, Banten, with investment of around 200 billion rupiah in each. The facilities, along with several capacity enhancements the company plans to carry out this year, are expected to boost the company’s production to 4 million pieces a day from previously 3.5 million pieces.

As of December last year, the baking company was operating eight factories nationwide.

Three of its facilities are located in Bekasi, West Java, while the others are in Pasuruan, East Java; Semarang, Central Java; Medan, North Sumatra; Palembang, South Sumatra; and Makassar, South Sulawesi.

Its Bekasi plants contributed most to the company’s total sales last year with 924 billion rupiah — or about 61 per cent of the total figure — followed by the Pasuruan and Semarang plants, which contributed 276 billion rupiah and 151 billion rupiah, respectively.

Stephen said that while Nippon did not plan on establishing any new factories this year, it had prepared about 120 billion rupiah to revitalise its older facilities and to add several production lines to support the company in achieving its production target. Out of the total funds to be disbursed this year, about 100 billion rupiah has been obtained from a bank loan from Bank Central Asia (BCA).

The company — claiming to control a 90 per cent share of Indonesia’s mass-produced bread market at the moment — markets namely white bread, sweet bread, cakes, sandwiches and bread crumbs.

Sweet bread made up 67 per cent of Nippon’s gross sales last year with 1.14 trillion rupiah, followed by white bread with 32 per cent.

 

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