Indonesia's Indofood Agri Resources said Wednesday that global demand for natural rubber slowed in 2012 as a result of an adverse global economy and a slowdown in tire replacement sales.
Due to the weaker demand, it said RSS 3 SICOM (Ribbed Smoked Sheets, Singapore Commodity Exchange) prices averaged $3,384/mt in 2012, down 30% from $4,824/mt in 2011, affecting its annual financial results.
On Wednesday, the company posted a net profit of Rupiah 1.819 trillion ($186.8 million) for 2012, down 31% from Rupiah 2.641 trillion the year before, which it attributed to "lower average selling prices for plantation crops and higher cost of production."
IndoAgri sold about 16,600 mt of natural rubber last year, down 3% from 17,100 mt in 2011.
Nevertheless, "the long-term outlook for rubber remains upbeat, supported by healthy demand from tire-makers, automotive industries and rubber goods manufacturers in developing markets. China in particular, is expected to contribute strongly to this demand, given its large population and status as the world's largest natural rubber consumer, at approximately 35% of world natural rubber demand," IndoAgri said.
China imported 2.18 million mt of natural rubber 2012, 4% more than the 2.10 million mt it received in 2011.
On January 26, the company said it will acquire a 50% stake in Companhia Mineira Companhia de Acucar e Alcool Participacoes, or CMAA, a Brazilian company that makes and sells ethanol and sugar.
CMAA operates a sugar mill at Minas Gerais, Brazil, with a production capacity of 3 million mt/year, that feeds an ethanol output of 200,000 cu m/year.
"This proposed acquisition is expected to be completed by Q2 of 2013," said Mark Wakeford, CEO and executive director of IndoAgri, costing about $71.7 million.
As of December 2012, IndoAgri has 268,725 hectares planted with oil palm, rubber, sugar cane, cocoa and tea, up 5% from 254,989 hectares in the corresponding month of 2011.
