INDOFOOD - INDF

Industry Analysis

Retail Trades is considered growing slightly, 60 % of retail trade is fast moving consumer goods

Based on data of BPS, the wholesale and retail trades industry has average growth at 14.7 % (at current price) between in 2006 to in to 2012. Despite of higher BI rate, the retail trade will still grow slightly. For modern retail segment, accordance to aprindo, the modern retail will rise slightly at 10 % up than previous year. The fast moving consumer goods is biggest portion in modern retail trade; it is 60 % of total demand of consumers.

Manufacturing: Food, beverage and tobacco

The graph illustrates that the manufacturing industry growth tend to follow the trend of economic growth. It could be saw that since 2005 the growth of manufacturing industry is under economic growth. According to World Bank, Indonesian economic growth will increase at 5.2 % in 2015. In conclusion, the increase of manufacturing industry is predicted fewer than 5.2 %.

Based on National statistical bureau, in between 2006 -2012, the average growth of food, beverage and tobacco industry is at 19 %.( at current price). As long as the population increases, the demand for food and beverage will advance. Moreover, the biggest portion of GDP is domestic consumption includes food and beverage.

As a result of those, the manufacturing industry in food and beverage segment is expected raise slightly in 2015 as the demand of it is rising at 10 %, the higher BI rate in 2015 could reduce demand.   

The ASEAN Economic Community which will be conducted in indonesia may make the competition more tight. The country needs to look at the potential segment that could be comparative advantage of indonesia to others country in south east Asia. 

INDOFOOD

High Cash to sales ratio and faster cash to cash cycle

 Accordance to annual report of 2013, the sales has increase 15 % up than sales in 2012. The gross profit margin has fallen in to 27.1 % in 2013, lower than 2012, which it was at 29 %. The higher inflation rate increases the cost of raw material which is bought from oversea.

The key driver of sales is consumer branded product segment which is 43.1 % of total sales. It consists of familiar branded product such as indomie, supermie, lays, pepsi etc.

The account receivable has increased sharply in 2013 up than 2012. The sharp increase may possible be driven by the acquisition of few companies in 2013, in agribusiness segment and in consumer branded product segment.

Cash to cash cycle has improved in 2013; it is faster than cash to cash cycle in 2012. From 76 days in 2012 becomes in to 67. The supplier expands its time for payment. The company has high cash to sales ratio in 2013, 23.7 % of sales, the company may possibly have several plans to purchase other company share and more fixed asset to increase its production capacity due to big available cash.

Forecast

The increase of sales in 2014 until 2016 are predicted at 10 % as the retail trade predicted advance at 10 %. The inflation rate in 2015 is expected fall as the central bank increase interest rate. As a consequent, the demand decrease and people tend to keep their money in the bank.

Accordance to the standard chartered research, the inflation rate will fall in 2015 than 2014 as the central bank will increase its rate in anticipating the rise of fund fed rate in next year.