Nippon Indosari Corpindo to Build Two New Factories in 2018
Indonesia's largest bread products manufacturer Nippon Indosari Corpindo plans to construct two new factories in 2018, a move that should translate to rising sales in the future. Cherie Theosarata, Head of Investor Relations at Nippon Indosari Corpindo, said the company will start building the two new factories in Gresik (East Java) and Lampung (South Sumatra) in the first quarter of 2018.
The factories, which are scheduled to become operational in 2019, should provide a boost to sales of Nippon Indosari Corpindo in the years ahead. Theosarata added that the funds, required for the establishment of the two factories, originate from the company's rights issue that was conducted in 2017. With the two additional factories, the company's bread production capacity will rise from 4 million pieces a day to 4.8 million per day.
Last year the bread-maker issued 1.12 billion shares to raise IDR 1.3 trillion (approx. USD $97 million) in fresh funds for business expansion in Indonesia and in the Philippines. Back then, Alex Chin, Independent Director of Nippon Indosari Corpindo, said that all proceeds from the rights issue would be used to establish up to five new factories - for the production of white bread and sweet bread - in Indonesia and in the Philippines in the next couple of years. This is part of the company's aim to become among the largest bread producers in the Southeast Asian region.
Currently, Nippon Indosari Corpindo, which is particularly known for its Sari Roti brand, is completing the development of a factory in the Philippines. In 2016 the company created a joint venture - named Sarimonde Foods Corporation - with Monde Nissin, a Philippine-based company that manufactures noodles, biscuits, packaged baked goods, and culinary aids, to run a factory in Manila. This joint venture also acquired Philippines-based All Fit & Popular Foods Inc.
In another example of the company's eagerness to expand beyond borders, Nippon Indosari Corpindo also reached an agreement (in late 2017) with Caffe Bene, South Korea's biggest coffeehouse chain, to become the exclusive supplier of pastry and cake products to all of Caffe Bene's 576 outlets in South Korea.
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A few months earlier, KKR & Co. L.P., the New York-based global investment company that is engaged in a wide variety of sectors including private equity, energy, infrastructure, real estate, credit, and hedge funds, acquired a 12.64 percent stake in Nippon Indosari Corpindo through KKR's Asian Fund III.
Per Q3-2017 Nippon Indosari Corpindo's sales fell 0.65 percent year-on-year (y/y) to IDR 1.82 trillion (approx. USD $136 million) from IDR 1.84 trillion in the same period one year earlier.
On Thursday (18/01) shares of Nippon Indosari Corpindo, listed on the Indonesia Stock Exchange, surged 2.88 percent to IDR 1,250 a piece. However, so far this year, the company's shares are still down 1.96 percent.
Stock Quote Nippon Indosari Corpindo - ROTI: