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Unilever Sets Aside $90m for Indonesia Expansion

Jakarta. Unilever Indonesia, one of the largest listed consumer goods producers in Indonesia, is setting aside Rp 1.2 trillion ($90 million) for investment this year as the firm foresees a continuing slowdown in consumer demand for the remainder of the year.

“Our [capital expenditure] is set to range from about Rp 1 trillion to Rp 1.2 trillion. It’s around the same amount as what we invested last year. We still believe in Indonesia for the long-term,” Sancoyo Antarikso, corporate secretary at Unilever Indonesia, told a press conference in Jakarta on Monday.

He added that the company had spent Rp 400 billion so far this year.

Much of the spending — funding for which will mostly be sought internally — is meant to increase the company’s plant capacity, improve distribution networks, as well as adding more ice cream cabinets in stores across Indonesia, Sancoyo explained.

First established in 1933, Unilever Indonesia, the local arm of British-Dutch multinational consumer goods company Unilever, is among a slew of publicly-listed companies in Indonesia that have announced less-than-ambitious expansion plans this year amid a weak local currency and a nationwide economic slowdown.

Indonesia, where household spending accounts for some 56 percent of the economy, grew 4.7 percent between January and March — its slowest pace of growth in five years. Meanwhile, the rupiah has depreciated by nearly 6 percent against the US dollar so far this year, data from the central bank showed.

“Growth rates [in Indonesia] have gone down …What’s deeply important is that it’s beginning to impact the consumer consumption behavior in our country,” Hemant Bakshi, president director of Unilever Indonesia, said in Jakarta on Monday.

Unilever Indonesia’s net profit grew 17 percent to about Rp 1.59 trillion in the first quarter this year from Rp 1.36 trillion in the same period last year, with an 8 percent increase in sales to Rp 9.4 trillion.

“For this year, it’s important for us to not just focus on what’s happening in the market but to really look at what can we do,” said Bakshi, who took the role of president director at Unilever Indonesia in November last year.

“If you look back at the history of our company, we’ve faced these problems and in fact, we’ve faced much worse, and during each of those times, our company has come out stronger,” he added.

Unilever Indonesia will distribute next month a final dividend of Rp 416 per share, equivalent to Rp 3.1 trillion. That would put total dividend payout at Rp 752 per share, equivalent to Rp 5.7 trillion. The company paid out interim dividend of Rp 336 per share, a total of Rp 2.56 trillion, in December.

Unilever Indonesia expects its oleo-chemical plant in Sei Mangkei in North Sumatra to be fully operational in the third quarter of this year, Sancoyo said. The plant would each year produce 200,000 tons of fatty alcohols and surfactants — the key ingredients for soap, detergents and shampoo — from palm oil.

Home and personal care products make up 73 percent of Unilever Indonesia’s sales, with food and refreshment products accounting for the remainder.

Shares of Unilever Indonesia, which trades under UNVR, fell 1.42 percent to Rp 41,550 on the Indonesia Stock Exchange (IDX) on Monday, compared to the 1.68 percent decline in the main stock gauge.

Source: www.thejakartaglobe.beritasatu.com, 8 June 2015