It blamed the decline in profits on one-time charges of IDR386.95 billion that included losses on currency swap transactions.
"Had there been no one-time charges...net profit after tax for 2005 would have been IDR399.7 billion," said the Indonesian firm's president Anthoni Salim in a statement.
Indofood's margins were also hit by high energy and raw material costs, lower crude palm oil prices that affected its edible oils and fats activities, and a promotion for the noodles business giving consumers 'one free' with every five packs purchased.
The operating margin decreased to 8.9 per cent compared with 11.7 per cent in 2004.
The company did see organic sales growth however, with the Bogasari flour business helping it boost turnover for 2005 by 5 per cent to IDR18.8 trillion.
Salim said the group will continue streamlining, reorganizing and reengineering its operation in 2006, particularly its distribution system, to improve performance.
"The company will also proceed to increase palm oil plantation to 250,000 hectares from 125,000 hectares in 2005," Salim said, adding that the expansion is needed to fully supply the company's palm oil demand.
The company has also reduced its outstanding debt to IDR6.8 trillion from IDR7.9 trillion at end-December 2004.