JAKARTA: Publicly listed food company PT Tiga Pilar Sejahtera Food (TPS) projects sales to rise by 25 to 30 percent this year despite the domestic economic slowdown, thanks to strong growth in its distribution network.
The company’s finance director, Sjambiri Lioe, said growth could be even higher if economic conditions were more favorable.
“If the economy is good we may be able to boost our annual growth to 40 percent,” he told reporters recently. “Our distribution is good, but the economy is not. Our bottom line is expected to grow by double-digits this year, but it might not be as high as our top line.”
Southeast Asia’s largest economy saw its annual growth rate fall to a six-year low in the second quarter of this year. The country of more than 250 million people depends on domestic consumption for more than half of its gross domestic product.
Tiga Pilar, which sells various food products from rice and noodles to candies and biscuits, booked a 29 percent surge in revenue in the first half of the year to Rp 3.15 trillion (US$234.8 million) on an annual basis, while its net profit grew by 13 percent to Rp 195.96 billion.
The company expanded its distribution network from 154,912 outlets across the nation in 2013, to 181,977 outlets in 2014, reflecting a 17.5 percent increase year-on-year.
It also doubled its rice production — the company’s main business, which contributes around 60 percent to its revenue — to 480,000 tons in the middle of last year.
Sjambiri said that the company had decided to postpone plans for an expansion to Vietnam and Malaysia this year, citing global economic conditions — including the depreciation of the Malaysian ringgit — and the enormous domestic potential.
The firm had previously planned to spend $40 million for expansion into each country, with a view to acquiring a stake of 90 to 100 percent in a Vietnamese food company as well as a majority stake in a Malaysian food company.
Tiga Pilar has earmarked Rp 1 trillion to be spent on capital expenditure this year, up from Rp 676 billion last year.
One of its expansion projects is the construction of a beverage factory together with a European company later this year, which is to be located in Central Java.
As previously reported, Tiga Pilar is ready to disburse up to Rp 7 trillion to have 17 rice-processing plants in operation by 2020 and boost its market share in the country’s staple food.
The company said it aimed to command 5 percent of the country’s rice market in five years time, compared with its current 1 percent grip, adding that to achieve the target, it would have to boost its production to 2 million tons per year.
TPS currently operates three rice-processing plants, located in Sragen, Central Java, as well as in Cikampek and Cikarang, both in West Java, with a total capacity of 480,000 tons per annum.
The company is currently constructing three new factories in South Sulawesi to support the production boost. The plants are expected to be ready in June 2016, and once construction of the three plants wraps up, the company could see its total output reach 810,000 tons annually.
Tiga Pilar, whose brands include Taro and Mie Kremez snacks, Gulas candy and Ayam 2 Telor noodles, booked a 27 percent surge in net sales last year to Rp 5.14 trillion, with net profit growing by around 7 percent to Rp 331.8 billion.
