Established in 1993, under the name PT Selapan Jaya, the company changed its name into PT Sampoerna Agro in 2007. The company engages in the production of palm oil products, superior palm oil seeds and non-palm products such as Sago (prima starch) and rubber. It produces Crude Palm Oil (CPO) and palm kernels, which contributed to 94% of the company's revenue in 2021. Its plantations are located in South Sumatra, West Kalimantan, North Kalimantan and Riau.

Relying on market and government support

Sampoerna Agro Head of Investor Relations Stefanus Darmagiri explained that the company has allocated between IDR 400 and IDR 700 billion in 2023.

"About 50% of the Capex will be for plantation development and the remaining half is for maintenance of fixed assets such as buildings, infrastructure and machinery," he said on February 28, 2023, as quoted by kontan.co.id.

The company has set up strategies to focus on the intensification to strengthen and increase its productivity rates in 2023, through mechanization, water management system and infrastructure improvements as well as digitalization efforts.

The company would also support the government in maintaining the supply of cooking oil materials before Ramadan fasting month, said Darmagiri. Right now, it has a production capacity of 515 tons per hour for palm oil. The company still focuses its market segment on domestic sales.

The prospect of business in 2023 is facilitated by the demand for palm oil in Indonesia, which is predicted to increase. This demand increase is due to the implementation of mixed biodiesel B35 program, which has started in February 2023.

Risks in palm oil business

• Financial terms: Palm oil companies' projection in profit and income is heavily dependent on the crude palm oil (CPO) selling price, market mechanism and the fluctuating prices.

• Environmental terms: Companies rely on good weather as it will affect the oil palm production rate.

• Regulation terms: The government has supported oil palm plantation firms and its policy implementation greatly affects the production, profit and income of those companies.