Ultrajaya Milk Industry

Stock Quote Ultrajaya Milk Industry - ULTJ:

Business Summary

Ultrajaya Milk engages in the field of food and beverage manufacturing. In the beverage industry, the company produces different kinds of beverage such as milk, tea, traditional drinks and beverages for health. Beverage products are manufactured using the UHT technology by heating at 140º C for three to four seconds to become sterile and then packed in aseptic carton packaging (Aseptic Packaging Material) so that they have longer shelf lives without using any preservatives.

In the field of food manufacturing, the company produces milk powder and sweetened condensed milk. It also produces tropical fruit juice concentrates.

Ultrajaya Milk markets its products by direct selling to modern trade customers (retail stores, kiosks and traditional markets throughout the island of Java) and through indirect selling (to clients stationed outside Java, handled by appointed agents and distributors scattered across all regions of Indonesia). About 90 percent of the company's production is absorbed by the domestic market. The remaining 10 percent is exported abroad.

Ultrajaya Milk obtains the fresh milk from farmers who are members of the South Bandung Farmer Cooperatives (KPBS) in Pangalengan (West Java) as well as other District Unit Cooperatives. Meawhile the tea leaves are supplied by PT Perkebunan. In order to safeguard the continuation and quality of the raw materials, Ultrajaya Milk established strong partnerships with farmers and provides guidance (including technical and managerial trainings and financing).

Aseptic packaging materials for the company's UHT drinks are still imported.

Ultrajaya Milk Industry's Financial Highlights:

	2010	2011	2012	2013	2014	2015
Net Sales	1,880.4	2,102.4	2,809.9	3,460.2	3,916.8	4,393.9
Gross Profit	592.2	625.7	901.7	1,013.8	937.0	1,382.5
Net Income	107.1	128.4	353.0	325.2	283.1	523.1
Operating Income	183.7	136.6	429.3	423.2	373.7	692.9
Income before Tax	220.0	370.8	537.3	436.7	375.4
Total Assets	2,007.0	2,180.5	2,420.8	2,811.6	2,918.1	3,540.0
Total Liabilities	783.4	828.5	744.3	796.5	644.8	742.5
Earnings per Share¹	37	44	122	113	101	180
Dividend per Share¹	0	10	0	12	0

^{in billion IDR rupiah unless otherwise stated
¹ in IDR rupiah
Source: Ultrajaya Milk Industry, Annual Report 2015}

Future Perspectives of the Indonesian Consumption Sector

Indonesia's recent economic growth is to a large extent due to Indonesia's robust domestic consumption. Not only does Indonesia contain one of the world's most populous populations, but it also constitutes a population that is burgeoning; the country's middle class is expanding rapidly and it shows in their consuming habits. A larger portion of people's disposable income can be spent on consumer products. As such, businesses that largely rely on Indonesia's consumer base have good prospects. McKinsey expects that Indonesia will move from its current position as the world’s 16th largest economy to the 7th largest economy in the year 2030, partly supported by domestic consumption as income per capita continues to rise in combination with rapid urbanization. The size of Indonesia's consuming class is expected to more than triple over the same period, from 45 million in 2012 to 135 million in 2030. Being a leading food and beverages producer in Indonesia, Ultrajaya Milk is expected to continue its expansion towards the future.

Indonesia's Growing Dairy Industry

According to Neilson, demand for dairy products in Indonesia has grown by over 10 percent per year for the past decade due to changing consumer habits and population growth. Indonesia is currently still characterized by a low per capita milk consumption (about 11.7 liters per year), which provides ample room for growth as Indonesians' milk consumption is growing by almost five percent per year. The lack of supply from local dairy producers means that Indonesia needs to import milk from abroad (Australia and New Zealand).

Another characteristic of Indonesia is that over 90 percent of the dairy market is dominated by processed milk (UHT milk, condensed milk). Ultrajaya Milk is the market leader in Indonesia's processed milk industry.