Indofood seeks debt recovery
food company, has said it is expecting up to 5 per cent growth in
sales for 2004 in the same week that it launches a further bond
offering on the Surabaya Stock Exchange in an effort to reduce its
debt load.
At the beginning of the week the company said that it would be launching an IDR 1 trillion (€88.7m) bond offering that follows on from two successful offerings in the past.
"This bond issue will form a part of the company's ongoing debt management programme to reduce its foreign exchange exposure by converting its US Dollar denominated debts into Rupiah debts, and to adjust its debt maturity profile from short-term to long-term debts," said company director Fransiscus Welirang. "Around 75 per cent of the net proceeds of the issue will therefore be used to repay some outstanding US. Dollar denominated debts (with the assumption of Rupiah exchange rate of IDR 9,000 for $1) and the remaining balance for repayment of Rupiah short-term debts."
Indofood, which was impacted by the economic downturn in 1997-98 and is continuing to be impacted by the devaluation of the Indonesian currency and rising wheat prices, said that for its latest quarterly results ending in March it had managed to reduce its US dollar debt to $397 million, compared to the previous quarter, which had stood at $400 million. Meanwhile its Indonesian rupiah debt was reduced from IDR 4.1 trillion to IDR 3.9 trillion for the same period.
"This issue will follow the former two successful issues, the first for IDR 1 trillion nominal value in 2000, and the second in 2003 for IDR 1.5 trillion nominal value, both of which were significantly oversubscribed, therefore the company expects to achieve similar success for this bond issue. In 2003, Indofood's bond was one of the most actively traded on the Surabaya Stock Exchange" Welirang added.
In addition to extending its public offering, the company says it also remains confident about its financial outlook for the rest of the year. Speaking to national press this week another Indofood director, Cesar de la Cruz, said that he was expecting sales to grow by between three and five per cent and that in turn gross profits were expected to rise by 11 and 12 per cent.
During 2003 the company said that instant noodles accounted for 33 per cent of its earnings, with wheat flour accounting for a further 28 per cent. In recent years the company has diversified its offerings for the Indonesian market - the world's fourth most populace nation - and now cooking oil, margarine and vegetable fat account for 24 per cent of its sale, with other snack products, infant food and flavours accounting for the remaing 15 per cent.
