FACTORS AFFECTING PROFITABILITY ON ANIMAL FEED COMPANIES IN INDONESIA

The animal feed industry is essential as it supports livestock industry in meeting the need of protein of a country. Feed contribution reaching at 70 percent of livestock production cost makes feed becomes an pivotal factor which could boost its sales. Unfortunately net income of animal feed companies for the last five years tent to decrease and emerged problems. The aim of this study were to examine internal and external factors affecting profitability represented by ROA and formulate recommendations in improving them. The results showed that internal factors affecting ROA significantly are Sales, COGS, and TATO, while for the external factor is exchange rate. DAR, inflation and international corn prices do not influence ROA significantly. The implications for companies and animal feed industries in improving profitability generally is by increasing sales and TATO value. Also, the company must be able to press COGS especially raw material cost which is more sensitive to profitability when its price is higher. Companies have to conduct risk management in order to anticipate exchange rate volatility followed by government’s action as regulator in maintaining macroeconomic and trade stability.

Studies on the animal feed industry and determinants of profitability had been done by researchers, but profitability studies with main object animal feed companies is still not widely done. Wardjojo et al. (2016) study the effect of working capital liquidity on the profitability of poultry companies

Types and Sources of Data
The study was conducted in the  Table 1.

Data Processing Techniques
Data processing in this study was quantitative methods using multiple regression, in which mathematical equation allows and is able to predict the values of a dependent variable using values of one or more independent variables (Nachrowi and Usman, 2006). The regression was conducted using panel data method. Panel   (Nachrowi and Usman, 2006).

Model Research
The multiple regression model used in the study that had been explained in Data Processing Techniques was:

Descriptive financial profit data
There is a trend that Net Sales of companies were increases with the biggest increase is CPIN and holds the largest  Source: Company financial statement (2010)(2011)(2012)(2013)(2014)(2015) lowest Net Profit is SIPD. For the complete financial profit data showed on Table 2.

Hypothesis test results
Based on the chow test, panel data chosen model is FEM where there are more significant variable and adjusted R-square is larger than the OLS model. Representation of FEM model output is presented in Table 3 with the regression model as follows:   Table 3

Cost of Goods Sold (COGS)
Variable in Table 3 shows the coefficient COGS is

Total Asset Turn Over (TATO)
Average trend of TATO has decreased 71 percent from 1,3 to 0,76 times turnover.  Noor (2011). The decreased trends of TATO illustrates that the rate of increase of company's assets is higher than the level of sales generated by these assets, it indicates the management of assets in generating sales are not maximum so that assets become less productive.

Debt Asset Ratio (DAR)
Average The regression results in Table   3 shows   (2015) and Suardani (2009) (SBM prices, the soy bean meal can be used as substitute products for corn as a raw material for animal feed (Ariyanti, 2008).

Return on Assets (ROA)
The animal feed company's profitability In addition, the company should monitor inventory levels which may vary according company scale, with referred to production plans and raw material requirements as well as an advance in the purchase of imported raw materials and purchase contracts quantity at a low price to obtain the best possible price.
The company must also expand local raw material suppliers throughout Indonesia and also provide intensive assistance to local farmers in order to produce quality products to be utilized as a source of raw materials for production. In addition to efficiency of production process through