JAKARTA (TheInsiderStories) – The unit of Salim Group, PT Indofood CBP Sukses Makmur Tbk (IDX: ICBP) has purchased PT Indofood Fritolay Makmur (IFL) shares owned by Fritolay Netherlands B.V., an affiliate of PepsiCo Inc., after the partnership ended, the management announced today. The company bought 49 percent of IFL shares for Rp494 billion (US$35.29 million).
According to the spokesman, Gideon A. Putro, with this transaction, IFL will terminate the license agreement with PepsiCo and the share sale must be completed in six months. After the transaction, the company’ ownerships increase to 99.99 percent of the total shares issued of IFL.
Before the termination deal, its subsidiary, PT Anugerah Indofood Barokah Makmur has received exclusive rights to produce, distribute and sell Pepsi beverage products. The Exclusive Bottling Agreement between the two was discontinued due to commercial reasons and the contract termination did not have a commercial impact on the manufacturer’ revenues.
The analysts rated, the rapid growth in sales of branded consumer products and the increase in the selling price of crude palm oil will encourage sustainable growth in the financial performance of Indofood in this year. While, sales of wheat flour through its subsidiary, PT Bogasari Flour Mills, are predicted to tend to stagnate.
According to Sinarmas Sekuritas analyst, Paulina, the company that produces fast-moving consumer goods showed a trend of sales growth until the second semester of this year, which is supported by the desire of households to maintain household appliances, despite the economy was in turmoil.
“We see that this will have a positive impact on sales of the company’ branded products through its subsidiary, Indofood CBP, until the end of 2020. Moreover, most of the company’ products have become market leaders in the country,” she wrote in her latest report.
Apart from these factors, the group will also benefit from a decrease in raw material prices, which could boost profit margins. The company’ agribusiness will also reap profits in line with the increasing trend of palm oil selling price which will support the company’s financial performance growth.
But, the distribution business and Bogasari are expected to weaken until the end of this year. This is influenced by the decrease in the volume of goods distributed amid the lower demand. The unit’ sales growth only reached 3.5 percent with a lower profit margin due to the increase in raw material purchase prices and lower demand from the small and medium business segment after being affected by the pandemic.
Indofood is a producer of instant noodles and wheat flour with the largest market share in Indonesia.
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