Indofood Agri

Indofood Agri: 3Q11 results below Bloomberg consensus.
Revenue at Rp 3.28 tr, +43% yoy, +2.4% qoq, compares with consensus of Rp 3.95b.
Net profit at Rp 211.3b, -18.4% yoy, -62.3% qoq, due to decline in gross margins (3Q11: 32%, 2Q11: 33.4%, 3Q10: 37.5%), as well as dilution effect following the spin off of PT SIMP on 9 Jun 2011 and disposal of 4.9% interest in Lonsum to external parties in Dec 2010.

The Plantation Division’s total revenue increased 19% yoy, largely due to higher sales volume of palm pdts (CPO and palm kernel) and higher ASP of CPO, seeds and rubber.
Edible Oils & Fats Division total revenue increased 48% yoy, du eto higher sales volume of cooking oil and by-pdts, as wel as higher ASP of key edible oil pdt groups.
Gross margins declined due to higher cost of pdtn due to timing in fertilizer application and higher purchases of fresh fruit bunches (FFB) from plasma farmers / third parties.
FFB nucleus and CPO pdtn in 9M11 grew 10% and 16% yoy to 2.023m tons and 0.6m tons rptvly. The Group also achieved additional RSPO certification for ~25k MT of CPO from one of Lonsum’s South Sumatra palm oil mills, bringing total certified CPO to ~195k MT.

Mgt notes, despite the current European debt crisis, the fundamentals for palm oil remain supported by consumption growth from India, China and other emerging Asian economies, and coupled with the demand for biodiesel driven by govt mandates in Europe, Brazil, and Argentina. Also expects the demand for palm oil products in Indonesia will continue to be supported by the demand from the food and beverage industry and population growth.