Conglomerate Anthony Salim, Successful Entrepreneur Of Chinese Descent Whose Business 'Withstands' The COVID-19 Pandemic

JAKARTA - The name Anthony Salim has been around the world of business. The man whose Chinese name is Liem Hong Sien is the CEO of the Salim Group, a family-run company with investments in food, banking and telecommunications.

Anthony Salim was born in Kudus, Central Java on October 15, 1949. He has Chinese ancestry and this motivated him to establish his main business in the trade sector like his extended family.

He took over the company after his father's death. The man who was born in 1949 completed his Bachelor of Arts in 1971 at Ewell County Technical College in England. Anthony Salim is an important figure in the rapid development of the Salim Group when it was almost bankrupt in 1998.

Despite his success, Anthony had suffered huge losses during the monetary crisis in 1998. At that time, the Salim Group had debts of up to Rp. 55 billion and was almost bankrupt. Even so, he can still get back up and can survive until now.

Based on Forbes records, the assets of Anthony Salim and his family reached up to US $ 5.9 billion or nearly Rp. 85 trillion, thanks to a series of successful businesses dominating the Indonesian market. He is now the 4th richest person in Indonesia, under the Hartono brothers, the Eka Tjipta Widjaja family, and Prajogo Pangestu.

And here is a business octopus belonging to the Salim Group:

The Salim Group is a business group that tends to run business from upstream to downstream. The Salim Group has successfully established PT Indofood Sukses Makmur Tbk as its holding company. Indofood is an Indonesia-based company primarily engaged in the food processing industry.

The company classifies its business into five segments, namely consumer branded products, Bogor, agribusiness, distribution and cultivation and processing of vegetables. The company started commercial operations in 1990.

The issuer with the INDF stock code managed to record an increase in performance despite the COVID-19 pandemic. As of September 2020, Indofood posted a 2 percent increase in consolidated net sales to Rp. 58.78 trillion compared to Rp. 57.85 trillion last year as of September 2019.

Operating profit was recorded to have increased by 21 percent to Rp8.63 trillion from Rp7.15 trillion, and the operating profit margin increased to 14.7 percent from the previous 12.4 percent.

"Profit for the period attributable to owners of the parent company grew 6 percent to Rp3.75 trillion from Rp3.53 trillion," said Anthoni Salim, President Director and Chief Executive Officer of Indofood, in an official statement, Monday, November 30, 2020.

Judging from the segment, the majority have recorded an increase in sales. Only Bogasari was depressed 3.53 percent yoy to IDR 16.66 trillion.

Sales of the branded consumer product segment, which are used as a support, were recorded to have increased by 3.85 percent annually to Rp33.72 trillion. This growth is still smaller than the distribution segment which reached 9.08 percent yoy to Rp3.41 trillion. Meanwhile, the thinnest sales growth was recorded by the agribusiness segment 2.95 percent yoy to Rp10.32 trillion.

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PT Indofood CBP Sukses Makmur Tbk itself is a subsidiary of PT Indofood Sukses Makmur Tbk. As its parent company, Indofood CBP products fill supermarket shelves to small shops.

The products are very diverse, ranging from instant noodles with the brands Indomie, Supermi, Sarimi, Pop Mie, Sakura. Then the beverage segment, such as Indomilk milk, Milkuat, and Cap Enak milk.

Some of the company's ICBP stock coded snack products are also in demand in the market such as Qtela, Chitato, Lays, Chiki, Jetz, Dueto, Cheetos, and so on. Then the chili sauce and soy sauce products are also named Indofood.

Just like its parent company, PT Indofood CBP Sukses Makmur Tbk (ICBP) has also made a positive mark. Quoting its financial statements, ICBP was also able to maintain top line and bottom line growth until the third quarter of 2020.

Throughout January to September 2020, ICBP pocketed sales of up to IDR 33.89 trillion or an increase of 3.37 percent year on year (yoy). The instant noodle segment is still the support for sales of up to Rp. 22.89 trillion. This amount increased 5.68 percent yoy compared to the previous Rp21.66 trillion.

However, the most significant sales growth was recorded in the flavor segment reaching 21.51 percent yoy to Rp2.89 trillion. Meanwhile, sales of other segments also experienced growth, although not significantly.

For example, dairy grew 3.82 percent annually, snacks 2.87 percent annually, and nutrition and special foods grew 1.44 percent annually.

The Salim Group has also penetrated into the integrated palm plantation business, from oil palm plantations, processing CPO oil, to cooking oil producers through PT Salim Ivomas Pratama Tbk.

This producer of cooking oil with the Bimoli brand has benefited from the COVID-19 pandemic situation. They succeeded in reversing the situation from a loss in 2019 to a profit in 2020. The performance of the company owned by conglomerate Anthony Salim in 2020 was successfully supported by restrictions on the movement of the community.

Movement restrictions make people spend a lot of time at home to break the chain of spreading the COVID-19 virus.

The company, which is listed on the IDX with the SIMP ticker code, managed to book revenue from contracts with customers of IDR 14.74 trillion in 2020. This achievement was 6 percent higher than the previous year's achievement of IDR 13.65 trillion.

President Director Salim Ivomas Pratama Mark Wakeford said that revenue from the plantation sector was IDR 8.45 trillion, the vegetable oil and fat sector was IDR 11.45 trillion, and others or an elimination of IDR 5.43 trillion.

As a result, Salim Ivomas managed to score a profit for the year attributable to the owners of the parent company of IDR 234.28 billion. This achievement is inversely proportional to the position of 2019 which lost IDR546.14 billion.

The company noted an increase in profitability mainly due to an increase in the average selling price of palm oil products and efforts to control costs and efficiency. He noted that the average selling price (ASP) of CPO and PK increased by 24 percent yoy and 21 percent yoy, respectively.

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In line with the decline in production, CPO sales volume decreased 15 percent yoy to 748,000 tons, while PK product sales volume decreased 17 percent yoy to 183,000 tons.

In addition, the increase in profit for the year was also supported by an increase in gross profit, a decrease in selling and distribution expenses, general and administrative expenses, and foreign exchange gain which was partially offset by a lower gain on changes in fair value of biological assets and an increase in income tax expense.

Apart from the ownership of Ivomas, the Salim Group also controls another large palm oil company, namely PT PP London Sumatra Indonesia Tbk (LSIP). The two palm oil giants are affiliated with Indofood Agri Resources.

In 2020, London Sumatra posted a brilliant performance. They recorded revenue from contracts with customers of IDR 3.53 trillion, although it was 4.4 percent lower compared to 2019's acquisition of IDR 3.69 trillion.

However, the decline in revenue was partially offset by an increase in the average selling price (ASP) of palm oil products by up to 26 percent yoy. The price increase also succeeded in bringing London Sumatra to record profit growth for the year attributable to the parent entity by 174.12 percent to IDR696.01 billion, compared to 2019's acquisition of IDR253.9 billion.

President Director of PP London Sumatra Benny Tjoeng said that the price of crude palm oil (CPO) managed to increase significantly in the second half of 2020, after having dropped to its lowest level in the second quarter of 2020. The increase in CPO prices is considered to be driven by expectations of the impact of weather conditions, the supply of CPO. limited, and increasing demand for soybeans.

"The increase in company profits was also supported by the company's efforts to control costs and efficiency. This was also reflected in a number of expense items that were successfully suppressed, such as cost of goods sold to Rp2.46 trillion compared to 2019 amounting to Rp3.13 trillion," he said.

Then, sales and distribution expenses also decreased to Rp. 52.9 billion, general and administrative expenses to Rp. 212.69 billion, and other operating expenses to Rp. 11.16 billion.

London Sumatra also maintained its financial position with total assets of IDR 10.92 trillion, including cash and cash equivalents of IDR 1.96 trillion. LSIP also did not provide funding through debt as of December 31, 2020.

From the production side, the production volume of core Fresh Fruit Bunches (FFB) decreased 11.7 percent yoy to 1,294,716 tons mainly due to the impact of weather and oil palm replanting activities. In line with the lower contribution of external FFB, LSIP's total CPO production also fell 16.9 percent yoy to 330,936 tonnes.

From that, the CPO sales volume decreased 22.2 percent yoy to 324,939 tons and the sales volume of PK and PK derivative products decreased 21.9 percent yoy to 97,552 tons.

Salim Group entered into the bakery business through its ownership in PT Nippon Indosari Corpindo Tbk (ROTI) which produces the Sari Roti brand. The company was only founded in 1995, but its sales record has skyrocketed.

Sari Roti products are easy to find anywhere, from mobile vendors, grocery stores to minimarkets. With an average product expiration date of less than a week, distribution is the key to successful Sari Roti sales.

Sari Roti recorded a decline in performance in the third quarter of 2020 on an annual basis (yoy). Quoting the third quarter of 2020 financial reports, the Sari Roti producer net sales decreased 0.81 percent yoy to Rp2.44 trillion.

In the same period the previous year, Sari Roti pocketed sales of IDR 2.46 trillion. Meanwhile, ROTI's net profit decreased by 39.9 percent yoy from Rp211.7 billion to Rp127.2 billion.

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"In 2018 we grew around 12 percent, in 2019 we grew around 20 percent in 2020 we were flat. It doesn't seem too demanding in the outperforming position, if Indonesia's economic growth of 3 to 5 percent Sari Roti could be even greater," explained Nippon's Head of Investor and Public Relations. Indosari Hadi Susilo, Tuesday, November 24, 2020.

Based on quarterly performance progress, specifically in the third quarter alone, ROTI pocketed Rp766 billion in revenue, up from the condition in the second quarter of 2020 which only pocketed Rp761.2 billion. Net income was also recorded to have increased significantly from Rp13.6 billion to Rp35.8 billion.

Nippon Indosari is building two new factories each in Banjarmasin and Pekanbaru. It is planned that the factory will operate in the first quarter of 2021 and can increase production capacity from 5 million loaves per day to 5.5 million loaves per day.

The father of three children also decided to expand his wings by starting a franchise business called the Indomaret Group since 1998. As of now, there are 28 branch offices spread across various parts of Indonesia. In fact, as many as 16,336 outlets have been scattered in various regions in the country.

Indomaret retail owner, PT Indoritel Makmur Internasional Tbk (DNET), experienced a drastic decline in net income until the third quarter of 2020. There was a 79.92 percent decline in annual net profit.

Based on published financial reports, profit for the year attributable to owners of the parent entity only reached Rp71.98 billion. This value dropped drastically from the position at the end of the third quarter of 2019 which was valued at IDR265.84 billion.

The value of net earnings per share also fell sharply to Rp5.08 compared to the same period the previous year Rp.18.74. Even though at the end of September 2020, the company recorded a significant increase in sales on an annual basis, reaching 102.82 percent compared to the same period the previous year.

The company's revenue was recorded at Rp316.50 billion, up from Rp156.04 billion in the same period the previous year. The drastic decrease in net income was partly due to sales expenses that had swelled to IDR 201.14 billion, compared to the end of September 2019 at IDR147.66 billion.

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