Japfa builds new factories to expand capacity

The Jakarta Post, Jakarta

Publicly listed poultry and aquaculture firm PT Japfa Comfeed Indonesia is enhancing its production capacity by constructing two new factories at a total cost of Rp 100 billion (US$11.3 million).

To help finance the expansion, the company will issue its first bond next month. The bond will be worth Rp 500 billion, have a maturity of five years and carry a fixed annual coupon of between 12.33 and 12.87 percent, said Japfa director Herry Wibowo on Wednesday.

The bond, which will be underwritten by PT Trimegah Securities and PT Bahana Securities, will be on sale to the public from June 26 to 28, and will be listed on the Surabaya Stock Exchange on July 5.

The new factories, which are currently under construction, are located in Bati Bati, South Kalimantan, and in Padang, West Sumatra.

"The Bati Bati plant is expected to commence operations by the end of this year, while the Padang plant, which is still in the early stages of construction, will begin operations in the first quarter of 2008," Herry said.

Herry added that besides financing the expansion, his company would use half of the proceeds from the bond issue to refinance its debt of Rp 250 billion and strengthen its working-capital base.

With the establishment of the two new factories with a total capacity of 360,000 tons per year, the company's poultry processing capacity will increase to 2.08 million tons from the current 1.72 million tons.

Japfa, which currently operates seven poultry processing plants in Java, Sumatra and Sulawesi, is also building a corn processing plant in Grobogan, Central Java, to supply raw materials to its poultry processing factories.

Besides processing poultry and breeding day-old-chicks, the company also runs an aquaculture business that produces shrimp and fish food with a total annual capacity of 148,800 tons.

Its net profit reached Rp 238 billion last year, almost five times its 2005 profit of Rp 41 billion.

Japfa's head of treasury and financing, Putut Djagiri, said that the company was looking to Rp 7 trillion in sales and Rp 245 billion in net profit this year.