Indofood delays milk plant

Related tags Indonesia Condensed milk

Indonesian instant noodle producer Indofood Sukses Makmur has
delayed the construction of a milk plant in East Java, worth $36
million, because the company claims it wants to focus on its core
noodle manufacturing business.

Indonesian instant noodle producer Indofood Sukses Makmur has delayed the construction of a milk plant in East Java, worth $36 million.

"We have delayed the project because we want to focus on our core business,"​ Indofood's chief administration officer Indra Josepha said.

Indofood's core businesses are instant noodles, in which it holds around a 90 per cent market share, and cooking oil. Indra said the company has not yet decided when it will resume the development of the plant.

"If the time comes, we will then restart the project,"​ he said, adding that there have been changes in the economic climate recently that have pushed Indofood to delay the project.

He offered no further explanation.

Previously, Indofood said that the milk plant was expected to produce 60,000 tons of sweetened condensed milk and would start operation in 2004.

Daniel Perdana, an analyst with Samuel Securities said that the delay is aimed at making Indofood more efficient, and that the market for the milk industry in Indonesia is still weak.

He said Indofood may switch the funds, which it initially planned to invest in the milk plant, to cover the high costs of buying crude palm oil - prices in the first half this year rose significantly.

Indofood is expected to buy almost 350,000 tons of crude palm oil, or around 60 per cent of its total needs this year, to produce cooking oil.

Hong Kong's First Pacific has a 48.7 per cent stake in Indofood.

Related topics Ingredients Fresh Milk

Follow us

Products

View more