DEPOK (eNBe Indonesia) - Indofood Sukses Makmur (INDF), the largest food company in Indonesia owned by Salim Group, booked profit attributable to owners of Rp6.36 trillion in 2022, declined 17% year on year (y/y) as finance expenses surged 172% y/y to Rp7.9 trillion related to acquisition financing in the past few years.
Sales actually grew 12% y/y to Rp110.8 trillion and operating profit rose 16.5% y/y to Rp19.7 trillion as a 127% jump in other operating income offset higher expenses both in selling and distribution and general and administrative.
Operating margin increased to 17.8% from 17%. Core profit which reflects the underlying operational performance increased 12% y/y to Rp9.06 trillion.
Anthoni Salim, the President Director and Chief Executive Officer of Indofood, said the year 2022 has been undeniably challenging, with rising geopolitical tension, high inflation and escalating commodity prices headlining the market uncertainties.
“For the year ahead, our growth strategy will be to continue to balance our market share with profitability and maintaining a healthy balance sheet,” he said.
On sales, consumer branded product contributed Rp65.2 trillion in 2022 (grew 14.6 y/y), Bogasari contributed Rp31.8 trillion (up 22.8%), agribusiness contributed Rp17.8 trillion (down 9.6%), and distribution contributed Rp6.2 trillion (up 24%).
Indofood’s cash flow balance sheet, however, weakened, as it generated net cash of Rp13.6 trillion from operating activities during 2022, lower than Rp14.7 trillion it generated in 2021. The Company spent Rp3.86 trillion on investment, lower than the Rp6.49 trillion it spent in 2021.
Indofood’s cash and cash equivalent reached Rp25.9 trillion as of December 2022. Its assets reached Rp180.4 trillion while liability amounted Rp86.8 trillion. Then the equity was Rp93.6 trillion.
Indofood CBP Sukses Makmur (ICBP), subsidiary of INDF, meanwhile, booked profit attributable to owners of Rp4.59 trillion in 2022, declined 28.3% y/y, due to a 215% surged in finance expenses, at Rp6.18 trillion.
ICBP is now valued 2x equity and traded with PE multiple 25, quite fair for a company with strong market position. Some might consider ICBP undervalued or probably peers are overvalued.
Sales actually grew 13.9% y/y to Rp64.8 trillion, wherein noodles enjoyed 15.8% growth to Rp47.47 trillion, but margins were squeezed. Operating profit margin of noodles, dairy, and snack foods were all under pressure.
ICBP recorded a 15% growth y/y in income from operations to Rp11.67 trillion in 2022 and a healthy margin of 20.6%.
Without taking into account the non-recurring items and foreign exchange (forex), core profit, which reflects the underlying operational performance, grew 7% y/y to Rp7.31 trillion.
ICBP’s cash flow balance improved, as it generated net cash of Rp8.8 trillion from operating activities in 2022, higher than the Rp7.9 trillion it generated in 2021.
The Company spent Rp1.5 trillion on investment in 2022 and used net cash of Rp12.8 trillion on financing activities. It has a cash and cash equivalent of Rp15.7 trillion as of December 2022.
Anthoni Salim said 2022 was a year full of challenges for FMCG companies due to geopolitical tensions, various changes in regulations and policies, and rising prices for various commodities.
He continued, in 2023 ICBP will remain focused on organically developing business activities in Indonesia and outside Indonesia, optimizing the balance between sales volume growth and profitability, strengthening market position in all product categories, and maintaining a healthy balance sheet position.***