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Unilever Indonesia's profit plummets as consumer confidence weakens
Unilever Indonesia’s net income so far this year is down almost 10 percent when compared with 2022, but the consumer goods company did see year-on-year profit grow 1.4 percent in the most recent quarter, thanks to increased sales.
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Publicly listed consumer goods giant Unilever Indonesia's headquarters in BSD, Tangerang, are pictured in an undated photograph. (File/unilever.co.id)
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nilever Indonesia has reported a 3.3 percent year-on-year drop in net sales to Rp 30.5 trillion (US$1.92 billion) in the first nine months of this year.
Net profit of the fast-moving consumer goods (FMCG) manufacturer plunged 9.2 percent to Rp 4.2 trillion over the same period, as its marketing and general expenses rose by 6.5 percent and 18.7 percent, respectively.
The company's finance director, Vivek Agarwal, pointed out that a significant part of the sales drop was attributable to exports, while domestic sales, which account for 97 percent of the total, dropped at a slower rate of 2.2 percent.
"[The sales drop] was caused by high pricing levels that the company set last year. With the commodity [prices] softening [and reducing the cost of raw materials], the firm needed to make some correction in our pricing to adjust to market conditions," Agarwal explained in an online press conference on Wednesday.
The price cut did not directly increase sales volumes, as the latter needed some time to rebound, according to Unilever Indonesia's president director, Ira Noviarti.
She also pointed to a report from analytics firm Kantar showing that consumer spending in the country had been on a declining trend for the past four quarters.
"In my opinion, it would take a few quarters more for household consumption to turn into positive territory," Ira said.
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