Operating profit also increased by 6.9 per cent to reach Rp 994.03bn (€70m) during the period ending 30 June, thanks to sales growth in both the edible oils and fats and the distribution groups.

The operating margin, on the other hand, declined by 8.1 per cent, attributed to rising wheat, raw materials and distribution costs, a trend that shows no sign of abating over the next year, the company said.

Higher commodity costs, often blamed on extreme weather patterns, the biofuel industry and low stocks, have been pushing companies all over the world to find alternative ways of keeping profits high.

"The rest of 2007 will continue to be challenging as raw material prices, particularly wheat show no sign of softening," said company CEO Anthoni Salim. "We will continue to be vigilant in controlling our operating costs, increasing our operating efficiency as well as enhancing our marketing and distribution strategies."

In order to combat rising prices, Indofood increased its operating spend by 15.5 per cent during the semester, up to Rp 1,586,273m (€124m) from Rp 1,372,719m (€107.4m) during the same period in 2006.

The results are disappointing in light of last year's results, which indicated the company's strongest performance in 13 years.

For the financial year 2006, operating profit rose 18.5 per cent, after a massive surge in demand for products containing palm oil.

According to the company website, Indofood is one world's largest instant noodles manufacturer by volume, and the largest flour miller in Indonesia.

The company produces and exports a wide range of food products, including noodles, snacks, flour and pasta, edible oils and fats, and cooking oils.