Indofood Agri

Indofood Agri: Results below Street estimates- earnings missed by 22%; FY12 revenues increased 9.8% to Rp13.8t, earnings declined 31% to Rp1.8t; excluding the effect of the biological assets gains recognized in both years, the adjusted FY12 attributable profit would have been down 22% against FY11. Earnings were affected due to the lower ASPs for CPO, higher production cost and operating expenses, as well as lower biological asset gains. On a full year basis, CPO prices declined 11% for FY12, averaging US$1,006/tonne. Mgmt stated that the slowdown in the global economy, particularly in Europe and China, has weighted down on commodity markets in 2012. Additionally, Europe’s biodiesel off-take was significantly lower than forecast, as well as increasing palm oil inventory. Edible Oils & Fats Division reported total revenue of Rp9.6t in FY12, representing 5% growth over FY11 mainly attributable to higher sales of cooking oil and copra-based products. Supported by higher refining capacities at the Tanjung Priok refinery and increased demand. The outlook for the palm oil industry is expected to remain positive as global demand is likely to be supported by consumption growth from emerging Asian economies like India and China. The long-term outlook for rubber remains upbeat, supported by healthy demand from tyre-makers, automotive industries and rubber goods manufacturers in developing markets. China in particular, is expected to contribute strongly to this demand, given its large population and status as the world’s largest natural rubber consumer, at approximately 35% of world natural rubber demand. Group previously announced a geographical expansion into the sugar and ethanol industry in Brazil with the proposed acquisition of a 50% equity stake in Companhia Mineira de Açúcar e Álcool Participações for a cash consideration of US$71.7m, which is expected to be completed by 2Q13. Group announced a 0.3¢ dividend for FY12; indicative yield of 0.2%