Despite these efforts, the Group recorded lower profitability in 2023 mainly due to lower selling prices of palm and EOF products. However, the decline was partly offset by higher sales volume of palmproducts. Net profit after tax contracted by 29% to Rp936 billion in 2023. NAVIGATING UNCERTAINTIES The Plantation Division faced challenges, evidenced by a flattish FFB nucleus production and lower external FFB purchases, anda consequent 4% reduction inCPOproduction. The lower CPO selling prices impacted the Plantation Division’s revenue and profits despite an increase in sales volume from the realisation of the previous year-end’s CPO stocks and tightened cost-control measures. Over in Brazil, CMAA processed 9.45 million tonnes of sugar cane. Our share of the joint ventures’ profit more than doubled to Rp133 billion in 2023, driven largely by higher raw sugar sales volume and prices, partly offset by reduced ethanol sales and higher income tax expenses. The R&D team bolstered the Division’s capabilities by developing new and high-yielding seed varieties with distinctive traits. Achievements included the identification of molecular markers for differentiating fruit types, and the cultivation of palm seeds with elongated stalks to aid mechanised harvesting. Similarly, our proprietary high-yield cane varieties showed promising commercial viability, underscoring their potential in boosting production. The EOF Division remained profitable despite reduced cooking oil sales due to domestic policy changes. The success was underpinned by competitive pricing strategies, which allowed us to stay profitable through regular price adjustments. Targeting the loyalty of middle-income consumers for our branded cooking oils, we refreshed the Bimoli television commercial (TVC), elevated visibility in the modern trades DEAR SHAREHOLDERS, The year 2023 posed a complex array of challenges for agribusiness operators, marked by the interplay of suppressed commodity prices, unpredictable weather patterns and rising costs. A significant factor was the decline in soybean oil prices, triggered by an unexpected surge in Brazilian soybean crops. This exerted a downward pressure on prices of competing edible oils, such as palm oil, and as a result, CPO prices (CIF Rotterdam) averaged at USD972 per tonne in 2023, down by 29% from USD1,370 per tonne a year ago. For producers in Indonesia, the dynamics were intricate. Despite a lower FFB harvest, CPO prices did not recover until late in the year, when diversions of palm oil into Indonesia’s B35 biodiesel mandate tempered with the global oversupply of soybean oil. The sugar market, however, was volatile with dramatic price fluctuations. InDecember 2023, the price of sugar contracted from a high of 27 cents to 20 cents USD a pound in a matter of weeks. This was attributable to approximately 2 million tonnes of additional sugar production in Brazil at the end of the harvesting season, and an estimated additional 1.5 million tonnes of sugar from India due to changes in the ethanol mandate. Added to these was the rising cost of energy and general inflation, which are key concerns for plantation owners. In response, we maintained our tight cost controls and costeffective initiatives, and prioritised bank loan repayments to lower interest expenses. Reflecting on our efforts in 2023, we chose to theme this annual report “StayingResilient toWeather Global Challenges”. Prudent financial management, coupled with the ability to adapt to complex market dynamics, had been central to IndoAgri’s stability and resilience. CEO’S MESSAGE GROUP OVERVIEW OPERATION AND FINANCIAL REVIEW SUSTAINABILITY & GOVERNANCE FINANCIALS OTHER INFORMATION Indofood Agri Resources Ltd 8
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