Friday, 14 March 2008

Indonesia's Sampoerna Agro plans palm oil investment

Indonesia's Sampoerna Agro plans palm oil investment

Fri Mar 14, 2008

JAKARTA, March 14 (Reuters) - Indonesian plantation company, PT Sampoerna Agro Tbk SGRO.JK, said on Friday it plans to spend 600 billion rupiah ($65.14 million) to acquire 15,000 hectares (37,070 acres) of plantation for palm oil this year.

Finance Director Eddy Kurniawan said the company planned to use its internal resources to fund the expansion although did not rule out seeking loans from banks.

"The expansion is likely to be in Sumatra, Kalimantan and Sulawesi, although we have not decided the exact place," Kurniawan said.

Sampoerna Agro is owned by Indonesia's Sampoerna family, who founded the country's largest listed tobacco company, Handaya Mandala Sampoerna Tbk, before selling its stake to Philip Morris.

The company produced 1.18 million tonnes of crude palm oil last year and aims to increase this slightly to 1.2 million tonnes.

He said the company's budget assumed a crude palm oil price of $950 a tonne, far below the current market price of around $1,200 a tonne.

Indonesian plantation companies have gained from a sharp increase in CPO prices in recent years due to demand from both the food and energy sectors.

Indonesia has taken over from Malaysia as the biggest palm oil producer in the world. ($1=9,210 rupiah) (Reporting by Nury Sybli, writing by Harry Suhartono, editing by Ed Davies)