EDIBLE OILS & FATS REVIEW Operation in Indonesia The Edible Oils & Fats (EOF) Division produces palm oil products, margarine and palm-based derivatives (RBD palm stearin and palm fatty acid distillate) for consumer and industrial markets. The Division operates five refineries with a total annual processing capacity of 1.7 million tonnes of CPO. The consumer cooking oils are retailed under Bimoli , Bimoli Spesial and Happy, and the consumer margarines under Amanda, Palmia and Royal Palmia. The industrial cooking oils are supplied directly to Indofood and other food manufacturers, while themargarine and shortening products are marketed to confectioneries, bakeries and food manufacturers under Amanda, Delima, Malinda, Palmia and Simas. Sales and distribution of EOF products are supported by Indofood’sDistributionGroup, whichhas anextensivenetwork across Indonesia. More than 83% of EOF products are sold domestically and the rest are exported to countries across Asia, Africa, America and the Middle East. 2023 REVIEW The Division’s refinery operations demonstrated resilience in 2023 despite cooking oil policy changes. This was driven by competitive pricing strategies that allowed for regular reviews and adjustments to maintain a certain level of profitability. Financially, the Division reported a 11% decrease in revenue to Rp11.3 trillion mainly due to lower selling prices. Despite this, the Division remained profitable with an operating profit of Rp647 billion, albeit lower than the previous year’s Rp842 billion. Integral to this performance was IndoAgri’s vertically integrated operation, ensuring a stable supply of raw materials to the Division. Throughout 2023, a substantial 77% of the CPO used in producing cooking oils, margarine and shortening came from our own plantations. The production capacity of the Surabaya industrial margarine plant, which was expanded by 200 metric tonnes per day (MTPD) in 2022, has enabled us to better meet rising margarine demand. During the year, we undertook a series of marketing activities to promote our branded cooking oils. Efforts included amplifying our brand presence with a new Bimoli TVC on major television channels, attractive displays to raise product visibility in the modern trade outlets, along with bigger and more prominent shelf space tomake our cooking oils more accessible to consumers. We also took part in a government programme offering affordable, packaged cooking oils to micro, small andmediumenterprises (MSMEs) andhouseholds, primarily under the government’s cooking oil brand, MinyaKita. For our consumer and industrial margarines, we developed thematic campaigns. These included new TVCs for Palmia multi-purpose margarine and Royal Palmia margarine, which helped to spur consumer sales during the festive seasons. We also organised cooking demonstrations in key modern trade outlets, engaging directly with consumers to encourage trial and consumption. For our industrial margarines, we enhanced in-store branding during festive seasons, and strengthened our online presence by integrating our B2B and B2C microsites. To connect with MSMEs and bakery owners, we brought the Palmia Baking Roadshow to 34 cities across Indonesia, introducing new recipes for our margarine and shortening products while demonstrating their versatility and quality in professional baking applications. The R&D team supported the EOF Division by improving the nutritional content of our cooking oil and margarine products to suit the dietary needs of Indonesian consumers. Achievements included customised cooking oil formulations for industrial customers, and multivitamin-enriched margarines for household consumers. We also continued to develop smarter packaging designs made from environmentally friendlier materials with help from the R&D team. 2024 OUTLOOK In the year ahead, we will continue to focus on the growth and recovery of EOF sales volumes through competitive pricing strategies. We are confident that the EOF market in Indonesiawill expand, in linewith the increasing population and per capita income growth trends. Efforts will be bolstered by thematic advertising campaigns, aimed at enhancing in-store product visibility and reinforcing our cooking oil and margarine brands. We will also continue to support Indonesia’s domestic market obligation (DMO) scheme through the government’s cooking oil brand, MinyaKita. Cartons distribution across Indonesia GROUP OVERVIEW OPERATION AND FINANCIAL REVIEW SUSTAINABILITY & GOVERNANCE FINANCIALS OTHER INFORMATION Indofood Agri Resources Ltd 24
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