Indofood Agri Resources, the manufacturer of leading brands of edible oils and fats in Indonesia, reported a positive set of results for FY09 with attributable profit surging 92% to Rp1,527 billion ($213 million), from Rp795 billion ($111 million) for FY08.

Given the unprecedented high CPO prices in the first half of 2008, the group reported FY09 revenue of Rp9.0 trillion ($1.3 billion) which was 23.6% lower compared to Rp11.8 trillion ($1.6 billion) in FY08 as a result of lower average selling prices of plantation crops and edible oil products, as well as lower cooking oil sales volume. This was offset partially by higher sales volume of CPO, palm kernel and margarine.

Despite lower revenue, EBITDA margin expanded to 33.0% in FY09 from 26.1% in FY08. The improved margin was partly due to reduced selling and distribution costs on lower export taxes and net gains on foreign currency.

Indofood Agri says in 2009, adverse weather triggered most of the volatility in commodity prices. Severe droughts in Argentina affected the production of soybean, a close palm oil substitute, reducing soybean crop from 46 to 32 million tonnes. While the wet weather in India caused a reduction in their oilseed crops, driving the increase in India’s import of palm oil to 6.8 million tonnes in 2009 from 5.7 million tonnes in 2008.

Consequently, CPO prices rebounded strongly from the second quarter of 2009 with a range of US$640 to US$801 per tonne before ending the year at US$792 per tonne. Palm oil remains a low-cost vegetable oil to produce given its high yield per hectare, capturing strong growth from major economies like China and India. Rubber prices reflected a similar rebound driven by lower global production, recovery in global demand and higher mineral oil prices.

Despite the challenging economic climate, Indofood Agri expects the demand for palm oil to remain resilient in 2010 with the recovery in the world consumption after the global economic crisis, coupled with stronger demand for biodiesel driven by government mandates in Europe, Brazil and Argentina.