Jun 12, 2014
The Jakarta Globe. Jakarta. Provident Agro, an Indonesain palm oil producer, has set aside Rp 500 billion ($42 million) in capital spending to finance its expansion plans this year, according to a company executive.
Devin Antonio Ridwan, finance director of the company, said on Wednesday the company would allocate Rp 375 billion, or 75 percent of its spending, to build two crude palm oil (CPO) mills in South Sumatra and West Kalimantan, both of which are currently under construction.
The company will allocate the remainder of the capex to extending its business reach to Indonesia’s other islands by acquiring 18,000 hectares of land in Gorontalo, northern Sulawesi.
Devin said about 80 percent of the funds will be obtained through Bank Permata and DBS Indonesia in the form of loans, while the rest will come from the company’s internal cash capital.
Each plant is being built on a 30-hectare plot of land nestled in two of Provident Agro’s nine plantations. They are expected to begin production in the fourth quarter of 2015.
“Once we can kick off operation, our production capacity will increase to 195 tons an hour, from the current 105 tons per hour,” Devin said.
Provident Agro aims to increase its CPO production by 23.45 percent to 100,000 tons this year, from 81,000 tons produced last year. Its first-quarter CPO output rose by 21 percent to 22,374 tons, compared to 18,483 tons during the January-March period of 2013.
The palm oil producer is also expecting its fresh fruit bunch (FFB) production to reach 350,000 ton — a 34.8 percent increase compared to last year — to help meet its CPO production target.
During the first quarter of this year, Provident saw its FFB production rise by 39 percent year-on-year to 75,616 tons.
The company currently operates three CPO mills and 11 plantations spread across Sumatra and Kalimantan, which cover a combined area of 44,475 hectares as of 2012 — a significant increase from the 24,680 hectares it owned only a year earlier, according the Provident’s website.
Though Devin declined to disclose the company’s revenue and profit target for this year, previously released data showed a revenue increase of 60.2 percent to Rp 244.41 billion between January to March. As a result, profit reached Rp 85.22 billion, compared to the loss of Rp 26.41 billion in the same period last year.
Devin said that the surge in the company’s first-quarter performance was supported by a significant increase in its average selling price (ASP) during that time, which went up by 37 percent to Rp 8,836 per kilogram of CPO.
The company also announced on Wednesday that it had secured Rp 415 billion in loans from DBS Indonesia, which will be used to finance operations of its subsidiaries, including Transpacific Agro Industry, Nusa Raya Permai, and Mutiara Sawit Seluma. Each stands to receive Rp 160 billion, Rp 28 billion, and Rp 227 billion respectively. Maturity for the loan facilities ranges from 3 to 4 years.
Shares of Provident fell 0.2 percent to Rp 489 on the Indonesia Stock Exchange (IDX) on Thursday, in line with the 0.8 percent drop in the main stock gauge.